Tax Savings

Tax planning is a basic responsibility of every citizen of the country. On the whole, there are three steps in tax planning.

The three steps are:
1. Calculate your taxable income under all heads i.e., Income from Salary, House Property, Business & Profession, Capital Gains and Income from Other Sources.
2. Calculate tax payable on gross taxable income for whole financial year (i.e., from 1st April to 31st March) using a simple tax rate table, given on next page.
3. After you have calculated the amount of your tax liability. You have two options to choose from:

Pay your tax (No tax planning required) - Minimize your tax through prudent tax planning.

Most people rightly choose option ‘B’. In case of option ‘B’, you have to evaluate the advantages of several tax saving schemes. Depending upon your age, social liabilities, tax slabs and personal liking, you can plan upon a right combination of investments. This helps in reducing your tax liability to zero or the minimum possible.