Benjamin Franklin once said- “Nothing is certain except for death and taxes”. And to add to this, arguably the smartest man to ever live- Albert Einstein said "The hardest thing in the world to understand is the income tax."

Most common folks don't understand death. And taxes too face a similar fate. The humble CA next door can't help you understand the former, but can guide you very well too understand, utilize and (daresay!!) actually enjoy taxes.

Many a hardworking and honest tax payers are unable to utilize simple and efficient tax planning tools which could enable them to legitimately plan their taxes and save hard earned money. Whether you are a salaried individual, a professional or a businessman, you can save taxes to certain extent through proper tax planning.

Take the real life story of Miss H (a good friend and not aware of tax laws and procedures) who was recently shocked to receive a notice from the Income Tax department for additional tax payments. A quick conversation with a CA ensured that her finances and filings were planned in a systematic manner and she in fact got a refund for excess taxes paid!! The story of H is not a one-off. There are many out there like her, who out of ignorance and (sometimes) callousness are victims of poor tax planning.

Common myths: Here are a few common misunderstandings that most of us have about taxes-

1. It's too complex to understand and implement-

   Reality- If you are good enough to earn a taxable income, then in all probability, you can definitely decipher, plan and save your taxes independently or with the help of an efficient tax adviser like a CA. Tax planning is all about:

   • Understanding exemptions/reliefs
   • Noting the underlying conditions to be fulfilled to be eligible for these exemptions
   • Making investments/planned expenses to ascertain that such conditions are met

     It is NO rocket science and in the hands of a trustworthy CA, you can definitely understand and implement the same!

2. It is only for the rich and my numbers are small-

   Reality- Definition of what is “much” may differ from person to person based on his financial standings. However, in pure percentage terms- a typical tax payer can on an average save anywhere between 5 to 35 %( approx.) of tax expenses through efficient and legitimate tax planning. Now if your tax liability was INR 100,000 and you saved 20% : It’s a cool INR 20,000 saved.

   Now you can best decide what you want to do with that extra moolah!!

3. Lots of records need to be maintained-

   Reality- Efficient tax planning does not need much record keeping. In today/s day and age, all proofs and receipts are linked and tracked digitally and hence an email inbox automatically acts as a custodian of all auto generated acknowledgments and tax deduction receipts. It’s not too much effort in terms of time or record management.

Few tax deductions and tax planning methods available for FY 2017-18

Please click on the link to get an idea on various common tax deductions and tax planning methods available for FY 2017-18 under the Indian Income Tax Laws.

For any queries, advice or services- drop in a note at casandeepdash@gmail.com

The author, CA Sandeep Dash is a practicing Chartered Accountant with 12 years of experience.