Tax Planning in India

tax planning in india

Tax Planning in India : Tax planning strategies for individuals in India

Tax planning is the legal process of analyzing your financial situation to reduce tax liability, save taxes, increase income, and achieve financial goals, with common strategies in India including:

Selecting the appropriate business entity, such as sole proprietorship, partnership, LLP, or company, is crucial as each entity has varying tax rates and benefits.
Maintaining precise financial records is crucial for claiming eligible deductions, exemptions, and credits.
Simplified tax regimes like presumptive taxation or new tax regimes offer lower rates and fewer compliance requirements, but limit deductions and exemptions.
Utilizing deductions under Section 80C to 80U of the Income Tax Act, 1961, one can reduce their taxable income by investing in various schemes like life insurance, provident fund, pension, education, medical, and donation.
Investing in tax-saving schemes, such as equity-linked savings scheme (ELSS), national savings certificate (NSC), public provident fund (PPF), senior citizens savings scheme (SCSS), etc. These schemes offer tax benefits as well as returns on your investment.
Depreciation, the reduction of an asset’s value due to wear and tear, can be claimed as an expense and reduce taxable income.
Input tax credit is a tax paid on inputs used in production or supply of goods or services, which can be claimed against output tax liability to reduce tax burden.
Capital gains, the profits from selling capital assets like property, shares, and bonds, are taxed based on their type and holding period. Reducing capital gains tax can be achieved by reinvesting proceeds in specific assets like residential houses or bonds.
Claiming tax relief under Section 90 and 91 of the Income Tax Act, 1961, if you have paid tax in a foreign country on the same income that is taxable in India. This can help you avoid double taxation and reduce your tax liability.
Hiring a professional tax consultant or using an online tax filing platform can assist in tax planning and compliance, providing advice on tax-saving options and ensuring accurate and timely filing of returns.

How to file taxes online in India?

Filing your taxes online is a convenient and secure way to submit your income tax return to the Income Tax Department. There are various methods and platforms available for filing taxes online, depending on your eligibility and preference. Here are some of the common steps that you need to follow to file your taxes online:

To register on the Income Tax e-Filing portal, you need your PAN, mobile number, and email address. If you are already registered, log in with your user ID (PAN), password, and captcha code.
Download pre-filled data from the portal by clicking on ‘Download Pre-filled Data’ under the ‘e-File’ menu, which contains information reported to the Income Tax Department by various sources, such as employers, banks, and mutual funds.
Choose the appropriate income tax return (ITR) form for your income and status, and check eligibility and instructions for each ITR forms of taxpayers (salaried, self-employed, business) on the portal.
Fill the ITR form online or offline, either directly on the portal by selecting the ‘Online’ mode of filing or download a utility (Java or Excel) to fill the ITR offline.
Validate and preview the ITR form after filling it to ensure all details are correct and complete.
Submit the ITR form on the portal by clicking on the ‘Submit’ button, receive an acknowledgement number and message confirming submission, and verify it within 120 days of submission using methods like Aadhaar OTP, net banking, digital signature, or sending a signed ITR-V (verification form) to the Centralized Processing Center (CPC) in Bengaluru.
Track the status of your ITR form on the portal by clicking on ‘View Returns/Forms’ under the ‘My Account’ menu. You can also check the status of your refund, if any, on the portal or on the TIN NSDL website.

How to file a revised return online in India?

A revised return is a way to correct any errors or omissions in your original income tax return. You can file a revised return online using the Income Tax e-Filing portal. Here are the basic steps to file a revised return online:

Log in to the portal with your user ID (PAN), password, and captcha code.
Click on the ‘e-File’ menu and select ‘Income Tax Return’.
Select the assessment year, ITR form number, and filing type as ‘Revised’.
Choose the submission mode as ‘Prepare and Submit Online’ or ‘Upload XML’.
Enter the acknowledgement number and date of filing of the original return.
Fill or correct the relevant details of the online ITR form or upload the XML file.
Validate and preview the ITR form before submitting it.
Verify the ITR form using Aadhaar OTP, net banking, digital signature, or other methods.

How to pay taxes online in India?

• Utilizes e-Filing portal for secure and convenient tax submission.
• Methods include net banking, debit card, credit card, UPI, or payment gateway.
• Registration required with PAN, mobile number, and email.
• Selection of appropriate challan form for income and status.
• Pre-filled data available for tax return form filling.
• Payment mode selection and confirmation followed by challan counterfoil as proof.
• Tax return verification within 120 days of submission.
• Status and refund tracking available on the portal.

How to check tax refund status online in India?

• Use Income Tax e-Filing portal or Tax Information Network.
• Enter PAN and assessment year for refund status view.
• Check refund status in Form 26AS, tax credit statement.
• Refer to web search results for more details.

How long does it take to get a tax refund in India?

• 4-5 weeks after e-verification and processing by Income Tax Department.
• Timeframe may vary based on payment mode, return accuracy, verification status.
• Status can be checked online via Income Tax e-Filing portal or Tax Information Network.

What is the penalty for late filing of taxes in India?

• Penalty ranges from Rs. 1,000 to Rs. 10,000, plus 1% monthly interest on unpaid tax.
• Penalties can include imprisonment and fines.
• To avoid penalty, file before the due date (31st July) or belated by 31st December.
• E-Filing portal allows online filing, payment, and refund status check.