Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible.
Types of Tax Planning:
- Purposive tax planning: Planning taxes with a particular objective in mind.
- Permissive tax planning: Tax planning that is under the framework of law.
- Long range and Short range tax planning: Planning done at the start and end of a fiscal year respectively.
Tax planning is the analysis of one's financial situation from a tax efficiency point of view so as to plan one's finances in the most optimized manner. Tax planning allows a taxpayer to make the best use of the various tax exemptions, deductions and benefits to minimize their tax liability over a financial year.
Every tax payer knows the toll that paying taxes puts on their financial income. ... Tax Planning helps you to smartly invest in savings instruments, thereby offering combined benefits of investment growth as well as reduction in the amount of taxes paid to the Government.