2. WHAT DO YOU MEAN BY TAX PLANNING? Tax planning can be defined as an arrangement of one’s financial and business affairs by taking legitimately in full benefit of all deductions, exemptions, allowances and rebates so that tax liability reduces to minimum.
10. Taxpayer spares no efforts in maximising his profits and attracting the least incidence. The tax gatherer, on the other hand. Tries to break the plans whose sole objective is to save taxes.
11. Three common practice to save taxes:Tax Evasion; Tax Avoidance; Tax Planning.
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14. Any planning done according to legal requirements defeats the basic intention of Legislature behind the statute could be termed as Tax Avoidance.
15. Tax Avoidance is done in such a manner that no infringement of taxation laws and by taking full advantage of loopholes to attract least incidence of tax.
20. Tax planning is more reliable as Tax Evasion and Tax Avoidance are wrong means to save taxes.
21. Government has provided companies with incentives in tax laws so planner gets the advantage to use such incentives.
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23. Helps in proper expense planning, capital budget planning, sales promotion planning etc.
24. Availability of accumulated profits, reserves and surpluses and claiming such expenses as revenue expenditure are possible today because of Tax Planning.
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26. The disclosure of all material information and furnishing the same to the IT department.
27. Tax Planning should not just comply legal provisions as stated but should be within the framework of law.
