Excerpts from Bajaj Capital's Tax Planning Guide for the Assessment Year 2007-08
Proper tax planning is the basic duty of every person, which should be carried out religiously. Basically, there are four steps in the tax planning exercise. You need not consult an Income Tax Practitioner or Chartered Accountant for this matter. In fact, you can do it yourself. These four steps of tax planning are:
- Calculate your Taxable Income for the Financial Year (from April 1 to March 31) from all sources such as salary /pension, interest etc.
- Calculate tax payable on Annual Taxable Income using a simple tax rate table.
- After you have calculated the amount of your tax liability, you have two options to choose from:
a) Pay your tax (no tax planning is required )
b) Minimize your tax through Prudent Tax Planning.
Most people should and do choose Option 'b'. Here you have to compare the advantages of several tax saving schemes and depending upon your age, social liabilities, tax slab and personal preferences, decide upon the right mix of investments, which shall reduce your tax liability to Zero or to the Minimum possible. You may consult your investment advisor for distributing your savings in various tax saving schemes.
More about Tax planning
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