There are numerous opportunities for minimizing the amount of income tax you pay.
In order to achieve that, you need intelligent income tax planning.
Income tax planning must be a continuous exercise because many tax saving opportunities can only be made use of by carefully planning in advance.
There are many informative books by intelligent writers to provide expert guidance on income tax planning.
They have discussed the different practical and tested methods of income tax saving that can be adopted to have maximum benefit.
It applies to all kind of income like salary income or income from house property, capital gains or interest. Some Important rules for income tax planning:
Disperse the Taxable Income
- One should try dividing the total income to the possible members of the family.
- To do that the members should show their independent sources of income and is an independent income tax payer under the provisions of the Income Tax Law.
- By doing this the tax liability is lowered and money can be saved as the same income is spread among different members of the family.
Gifts are Not Taxable
- The primary rule of income tax planning implies the maintenance of income tax files for oneself, spouse, children, and for all other close relatives in the family, including the parents.
- Benefits of tax can be achieved through the process of gifts and settlement.
- In case, any gift is received from the members of the family and relatives is not considered income. Thus, no income tax is payable on gifts received from relatives.
- Gifts received from other parties who are not relatives, up to a sum of Rs. 50,000 is not taxable.
- Any gift at the time of marriage up to any amount is also not taxable.
- So, you can plan your tax depending on these strategies.
Income tax is Not Applicable on Inheritance
- No income tax is payable on the inherited money and assets.
- The fundamental rule implies that the asset received by inheritance is not your income but it is a capital receipt.
- So, incase, you inherit either fixed deposits, shares or any kind of movable or immovable property owing to the demise of a person, you are not liable to pay any income tax at all on the value of all inherited assets
Complete Information of Tax Exemption
- You should always try to take the maximum benefit of the exemptions and deductions.
- Tax should be planned in such a manner that you are able to claim all possible exemptions and deductions which are permissible under the Income Tax Planning.
Maximum Benefit of Tax Deduction
- Income tax planning will be appropriate if you know the various tax deductions available under the income tax law.
- Benefits of deductions can be availed for all the family members as per the act.
- There are various income tax rebates which can be availed by selecting the right kind of investments.
- Age factor should be considered while claiming to get the permissible rebate.
- The kind of income which is exempted from the purview of tax is called exempted income.
- For example, there are some bonds which are known as tax-free bonds, the interest earned on these is exempted income.
- Any income from agriculture also comes under the exempted income.
Some other tips to save tax:
- Salary Packages should be designed in the income tax benefiting Regime
- Loan should be taken to Invest in Residential Property.
- Investment should be done on Minor Children
- Real Estate Investments can give you the benefit of income tax rebate
- Life Insurance should be planned for financial Security and reasonable returns
- Investors should be aware of bigger expenditures.
- Mutual Fund Investment can avail you the benefits of tax
- Tax savey Investment Planning by Senior Citizens
- Always maintain a Record of Your Investments
- A Financial Planner for You income and family members.
- You should intelligently tap your Invisible Funds.
- Joint Bank Accounts should be done with tax planning
- Investment should be within the limit of Allowances