Friday, 6 June 2014

Corporate tax planning is it a crime or legitimate

Wwhat is illegal is only the activities and transactions concerning tax evasion. For your bright future and growth of the business enterprise keep adopting the legal way of income-tax planning to bring more income and less tax in the family. hen we talk of corporate tax planning and tax planning for all those persons who are in business or industry, then we find that if the businessman adopts the concept of LLP i.e. Limited Liability Partnership in contrast with tax entity in the form of a Private Limited Company, in that situation there is bound to be much lower income-tax liability in the case of all those tax payers who carry out Business Enterprise known as Limited Liability Partnership or LLP. This is mainly and only because of the fact that a corporate tax entity doing business by setting up a private limited company is also required to distribute “Dividend Distribution Tax” in respect of the amount to be distributed as Dividend and only thereafter the amount received by way of “Dividend” gets exempted in the hands of the shareholder. Now let us analyse the Limited Liability Partnership where we find that in the case of Limited Liability Partnership the firm alone makes payment of income-tax and the balance amount available after payment of income-tax which is being distributed. Thus, one can legally save dividend distribution tax by properly planning the affairs of the business under the concept of LLP.

Similar is also the situation with reference to the depreciation under the Income-tax Law. If plant and machinery and other equipments purchased on or before 30th September of the year, in that situation the tax payer enjoys depreciation for the full year whereas reversely if the plant, machinery, assets are purchased on or after 1st of October of each year, then the depreciation deduction is cut down by half. It would, therefore, be good tax planning to buy assets before 30th September so as to claim depreciation for the full year. This again is a theme of tax planning which should be taken into consideration specially by all those persons who are in business or profession. 

In the conclusion, we can say that tax planning definitely is valid and legal within the framework of the law and what is illegal is only the activities and transactions concerning tax evasion. For your bright future and growth of the business enterprise keep adopting the legal way of income-tax planning to bring more income and less tax in the family. 

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