Confused about how to save tax in India? Running a Business in India is a cumbersome job. You are burden with a lot of Taxes for operating your Business in India. Whether it’s a small business, the person ends up paying a huge amount as GST or Income Tax or PF or ESIC, etc, etc. and the never-ending list goes on & on. But with proper planning, an entrepreneur can optimize tax payments. So here are a couple of things an entrepreneur can adopt to do Tax Savings.
1. UTILITIES ON HOW TO SAVE TAX:
Are you worried about how to save taxes? Various utility expenses such as vehicles expenses or telephone Expenses are allowable business expenses provided it’s for business purposes. Also, parking charges for vehicles, driver’s salary, etc, can be definitely claimed.
A vital point that many entrepreneurs miss out on is that preliminary expenses in setting up the business is an allowable business expenditure and can be claimed u/s 35D of the Income Tax Act, 1961. They are deductible from the taxable income for a period of five financial years.
Another expense would be If you are running your business from home, then electricity expenses, Internet charges, landline charges also can be claimed. One needs to proportionately decide what was towards business and what was personal which we suppose can be done easily at a justifiable rate.
Health Insurance premiums commonly known as Mediclaim are allowed as a deduction u/s 80D of the IT Act,1961 up to Rs 25,000/- this also includes the Preventive Health Checkup. If you cover your parents as well then the deduction amount also increases. Also if he invests in ELSS of Mutual Funds, a further deduction u/s 80C up to Rs 1,50,000/- is allowed.
In case your spouse has exhausted their deduction limit for Insurance, you can claim the remaining amount, provided the premium amount was originally paid from a joint account of your both. You can always consult your tax consultant for this before payment of Medical.
3. MARKETING :
Marketing is one of the most important tools that is not used by a business as they operate under the assumption that once they get some revenue then they will make a budget for Marketing, This is a huge mistake done by every 7 startups out of 10. Any marketing expense done for business purposes is an absolutely allowable expense and can be claimed to reduce the tax liability. To start marketing your Business to get the dual benefits i.e how to save tax and Revenue Source.
4. Donation :
Donation not only serves as a good deed that you do for society at large but also has tax benefits that reduce your tax liability. Donations paid are an allowed deduction u/s 80G help you claim only 50% of the amount made as a donation. If you want to know how to save tax and claim 100% of the donation amount, one might donate to the PM Relief Fund or any CM Relief Funds.
5. HOUSING LOAN :
Lastly, If the entrepreneur has a Housing loan, the interest amount can be claimed as a deduction under the head “Income from House Property” and the Principal can be claimed u/s 80C subject to the limit of Rs 1,50,000/-
In this way, among others, an entrepreneur can legally save his taxes to help his business. As there are several provisions of how to save tax, it is only wise to make use of them to the maximum. For implementations of these tax savings methods legally and professionally an entrepreneur can always rely on a credible tax and bookkeeping services provider or a Tax Consultant or a Chartered Accountant to assist with tax planning.
The information on how to save tax provided in the Taxzona Blog does not constitute any legal, tax, or financial advice. It does not take into account your particular circumstances, objectives, legal and financial situation, or needs. Before acting on any information in the Taxzona Blog you should consider the appropriateness of the information for your situation in consultation with a professional advisor of your choosing.