In the last budget, finance minister introduced Section 80C replacing Section 88, wherein we can claim deductions up to Rs.1,50,000 by investing in instruments eligible u/s 80C.
Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits.
Calculate Income
It involves doing an accurate and precise calculation of your monthly and thereby annual income from various income sources.
Taxable Amount
Your entire take-home pay is not taxable. Fractions of your salary, like allowances for house rent or travel, are not taxable.
Avail Deductions
This can be done through structuring your salary and planning your investments right.
Tax Saving
There are many investment instruments that offer effective tax planning like Provident Public Fund (PPF), Equity Linked Saving Schemes (ELSS) etc.
It involves doing an accurate and precise calculation of your monthly and thereby annual income from various income sources.
Your entire take-home pay is not taxable. Fractions of your salary, like allowances for house rent or travel, are not taxable.
FAQs
- What is Tax Planning?
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Tax planning can be defined as an arrangement of one’s financial and economic affairs by taking complete legitimate benefit of all deductions, exemptions, allowances and rebates so that tax liability reduces to minimum.
- What is Tax Avoidance?
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The line of demarcation between tax planning and tax avoidance is very thin and blurred. The English courts about nine decades ago recognized the right of a taxpayer to resort to the legal method of tax avoidance.
- What is Tax Evasion?
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All methods by which tax liability is illegally avoided are termed as tax evasion. An assessee guilty of tax evasion may be punished under the relevant laws.
