‘Tax’ a most feared word. No one likes to pay tax, since it’s a compulsory contribution. People think that paying tax is a waste of their hard earned money, because money is going out in form of tax but the money is not reaching the right hands. The more you earn the higher tax bracket you fall into. But having said that, there are plenty of tax saving tools out there. Of course it’s not possible for a layman to know all the tax rules, but if the tax cut is a huge amount then tax planning is required.
What is tax planning?
Well, let’s just say, if you do tax planning, then you can take more of your hard earned money home. Tax planning is making maximum use of the tax saving tools, to take more of your earnings home. Of course everyone’s earnings, situation, assets, etc are different, so different tax rules apply to different people. People think it’s normal that their tax gets cut, because they earn that much, but what they don’t realize is that, if they put in a little efforts, they can save part or the whole tax that gets cut. If they are not sure of how to save the tax, then take help of a consultant. Here also people make a fuss that fees are expensive. What is not considered is that, the tax that is getting cut is much more than the fees of the consultant.
Now a days, people are realizing the importance of tax planning. They are actually taking it seriously and showing in interest saving their taxes. But still in our many years of experience, there are some that do not know the basic deductions. There are some who have exhausted the basic deductions and still a huge chunk is getting cut. This is because they do not know about the other tax saving tools. One of the main reasons as to why people do not know the tax rules or tools, is because some rules change every year and it is difficult to keep up for a normal person. Tax is complicated, there’s only so much one can learn about the deductions, it is not possible to learn everything. Even chartered accounts and other tax experts reach where they are after years of experience and training.
Here are some pointers to keep in mind, before you think ‘It’s okay if my tax is getting cut’:
Why Pay, When You Can Save
Even though the Govt. has made tax a compulsory contribution, tools to save the same contribution is also given. If you don’t know about the tax saving tools or you’ve not updated yourself on it or not aware of the changes in the tax rules. then take help of a consultant. So when you can save and take the award of your hard work home, why let it go.
Must read: Tax Planning demystified
Hard Earned Money
Nobody works for free, unless you are doing charity work. People work so hard and put in all their efforts just so that, their family can live a better life. But it’s such a disappointment when they realize, that their 2 to 3 months salary goes in paying annual tax. When you’ve worked so hard for it, your are completely entitled to it. So tax planning is very necessary to take more of your salary home.
Invest The Surplus
Is your salary going in paying tax and the rest to meet your monthly expenses that very little is left to invest? This is where tax planning can help. After your tax planning is done, you’ll be surprised to see how much you can save. That money saved can be invested in tax free investments. This way you can earn out of the tax saved.
Some people don’t realize that they can bring their tax down to nil if they use the tax saving tools to the maximum. Tax planning is very necessary, as the tax saved can be invested in tax free instruments and the amount gained can be used to fund a certain goal. So put some thought into saving your taxes, don’t let it just get cut.
So as you can see, that all these pointers are for your benefit only. Once you do your tax planning, you’ll be surprised at how much your gonna save. Tax planning is very important and it’s good to see that people are making efforts to save their tax. At the same time, it’s also sad to see that some people are not doing anything to save their taxes, either because they do not know the basic tax saving tools or don’t want to seek a consultant’s advice because of the high fees. Having said that, there are many ways in which people can be helped. Tax planning seminars, tax planning workshops, there are companies which provide such services. One can even update themselves on the new tax rules. So save as much as you can, after all it is your hard earned money.