A tax consultant can advise you regarding the investments that would help in reducing your tax burden and increasing your returns on the investments.
Tax consultancy services give you the right direction towards tax planning and the use of your financial resources. By following the suggestions of a tax consultant, you can save a substantial amount of tax money.
Guide to avoid unnecessary taxes:
Below are the ways which help you to save your money from going to the state revenue reserves in the form of Tax:
Benefits of Interest on Housing Loan
Availing home loans is beneficial in many ways. The amount of interest and the principal amount is deductible under different sections of IT.
Payment of Municipal Taxes by Cheque
Municipal taxes are eligible for deduction from Tax. Making civil tax payments by check gives you a receipt that you can use for claiming the deduction. It will also reflect in your bank statement.
Keeping Records of the Cash Expenses
Many business expenses are in cash. Improper recording of such cash payments will go towards profits, resulting in a higher amount of taxes.
Proper Stock Valuation
Stock with a short shelf life is given a value on the NRV or Net Realizable Value. It will prevent the stock from getting overvalued, and ultimately, reduces taxes.
Calculation of Depreciation
Manufacturing enterprise enjoys multiple benefits from the IT Act. It is some additional depreciation, specified business under section 35AD, and many more. The claim of extra reduction is a way to reduce your taxable income and save on the tax payment.
Prefer Tax Deduct as Source
Several transactions require the buyers to deduct tax at source while making payment to the specific service provider. If not done correctly, such an expense increases your tax burden.
Avoid Cash Payments
Cash payments above Rs. 20,000/- in a day to a single person cannot qualify for the deduction of expenses. Cheque payment or direct bank transfer is a good option.
Deduction of Incomes Taxable Under Heads
Total profit includes indirect incomes, such as interest incomes. Such revenues are taxable under one category and exempted in some other sections. If not appropriately recorded in the account books, you may end up paying higher taxes.
Timely Filing of Income Tax Return
Timely filing of the income tax return can give you many benefits, like carrying forward of losses on business income. You can set this off against next year’s salary.
Long & Short Term Capital Gains
The capital asset which you hold for more than 36 months is a long term capital asset. On the sale of such assets, long term capital gain arises. Goods sold within 36 months are short-term assets. Both are taxed differently.
It is the time value of money. Cost Inflation Index (CII) is essential to calculate the indexed cost. It changes your long term capital gain and hence, the tax that you pay on it.
Treatment of Mutual Fund SIP
In a SIP, every instalment is considered a separate investment. At the end of 12 months, only 1st instalment has exceeded 12 months and is exempt from tax. The other 11 are short-term and taxable. Hence, sell your MF units in instalments and avoid tax.
Exemption from Capital Gains
If you reinvest the sale proceeds realized from the sale in some specific schemes, it becomes exempted from Tax. A tax consultant can advise you in this regard.
Life Insurance Premium:
Premium paid on life insurance of self, spouse, and children are eligible for tax exemption under section 80C.
Investment in PPF:
Investment in PPF is Tax-free under section 80C and offers an excellent rate of interest.
Medical Insurance Premium:
Premium paid on medical insurance premiums of self and dependent can be exempted under section 80D of IT.
Pay Advance Taxes:
It will avoid any penalty for the late deposit of Tax and saves your money.
Hire a Competent Tax Consultant:
Hire the best tax consultant in the market and give your financial management in the hands of the experts.
Penalty saved is indeed a penny gained. You must manage your finance wisely under the advice of the best tax consultancy services and see your capital growing fast every year.