Income tax is a tax that is levied on income earned by the individual. It is governed by the 'Income Tax Act, 1961. The Income tax Act provides different rates for different classes of persons. The income would be taxable at rates specified for different individuals for that particular assessment year. As an individual under income tax law, you will have to file his return by 31st July. In case, covered under the new economic criteria, will have to file your return by 31st October.
However, tax planning refers to an exercise carried out by a tax payer to meet his tax obligation in a proper, systematic and orderly manner availing all possible exemptions, relief and deductions available under the Income Tax Act, as may be applicable to his case. Tax planning is very necessary for every body as the tax paid is an addition to the cost. Just as every businessman tries to maximize his profit by reducing the cost, he should arrange his affairs in such away, that he pays the least amount of tax. This however should be done within the four corners of law and there should be no element of fraud in it.
Every tax payer is expected to make faithful disclosures truly and fully with reference to particulars of his income and pay taxes abiding to the tax laws. When a tax payer deliberately or consciously conceals material particulars or furnishes false or inaccurate particulars or attempts to defraud by violating the mandatory provisions of law, it shall be termed as tax evasion. Tax evasion is unethical, immoral and illegal also. Instances of tax evasion include measures in the nature of inflating expenses, suppressing incomes, recording fictitious transactions, knowingly claiming wrong deductions etc.
So, you just need to have some basic knowledge of a few fundamental provisions to plan your taxes, even without taking the trouble to visit a professional consultant.
Before embarking on exercise on tax planning it is critical to understand the deductions, exemptions and rebates allowed under the Income Tax Law
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