In business, every penny counts. And the businessman is always looking for an opportunity to save that one penny of expenses and add it up to his profits! And one of the most tedious of all expenses is tax – of course, you have to pay for the money you worked so hard for, paying taxes hurts. But you need to consider it as just another incidental business expenditure and find ways to reduce the amount of tax you’ll be paying rather than evading it entirely. Let’s have a look at some ways that you can use to cut down the amount of tax payable by you:
- Pay your municipal taxes by cheque:
Most people pay these taxes by cash and then don’t bother to keep a copy of the receipt along with them. This makes this expense ineligible for deduction. An easy way out is – pay the taxes by cheque. This leaves you with a proof in hand, even if you lose the receipt! And then happily claim your deduction amount!
- Watch out for indexation benefits:
When computing long-term capital gains, do consider the indexation benefit. This has a considerable effect on your taxable income, thus reducing the amount of tax payable.
- Valuation of stock:
The stock is valued at cost or Net Realisable value whichever is lower. Make sure you do this all around the year and evaluate your inventory according to the rule. This will have a direct impact on your profit amount, thus affecting your net income too.
- File returns on time:
Filing returns well within time will bring you a host of benefits. This mainly applies to the losses carried forward from past years. Filing returns on time help you set off these losses against current years income, thus considerably reducing your taxable income.
- Maintain proper records:
Saving back all those payment receipts and income details will definitely be of great use for you. The information which goes in your tax returns is derived from these every record – so ensure you have them well in place. Also make sure that you do your r&d research before you manage your taxes.
- Hire a professional:
When in doubt, always take the high way. Hiring a professional will benefit you in many ways. The experience they have in his field is, and they come up with perfect ways to help you reduce the amount of tax payable. Don’t think of the amount paid to this expert an expense – consider it an investment that will reap you more benefits later!