TAX PLANNING

NEW TAX SLABS

AND EXEMPTIONS
INTRODUCTION
Tax planning is the strategic process of
organizing financial activities to minimize
tax liability and optimize overall financial
success. By understanding tax structures,
deductions, and credits, individuals and
businesses aim to preserve wealth and
maximize after-tax income.
Dispelling misconceptions, exploring
different types of tax planning, and adapting
to evolving regulations ensure individuals
and businesses make informed decisions for
long-term financial well-being.
 History of Tax
Taxation has deep roots in human civilization, dating back to ancient
societies where rulers levied taxes on their subjects in various forms such
as labor, crops, or goods. Throughout history, taxation has evolved in
response to the needs of expanding governments and changing
economic landscapes. Feudal systems in the Middle Ages relied on taxes
collected from peasants to sustain the ruling class and support local
governance. The modern concept of taxation emerged in the 17th and
18th centuries with the rise of centralized nation-states, which required
stable revenue sources for funding wars and administrative functions.
Today, taxation remains a fundamental tool for governments to finance
public services, redistribute wealth, and regulate economies, albeit facing
new challenges in the digital age and globalization.
 Review of Literature

Manxia Yuan, Xi Xu Lillian F. Mills and Khaoula Dr. Mudholkar

Kaye J. Newberry Ftouhi Gajanan Panditrao
Research on Research by Published journal on Research conducted
international tax by Associate professor tax planning on “INCOME TAX
School of from American techniques through PLANNING AND
Management, Jinan Accounting Taibah University, MANAGEMENT”
University, Association on tax Medina, Saudi
Guangzhou, China planning Arabia
 Importance of Tax planning

Minimizing taxliability Ensure compliance

The overall tax burden by utilizing legal Compliance avoid penalties, fines and legal
strategies to deductions, credits and issues.
exemptions.

Optimize financial resources Enhance cashflows

Financial resources allocates more efficiently By minimizing tax liabilities, tax planning can
considers tax implications of various financial improve cash flow of the firm.
decisions.
Promotes economic growth Long term financial goals
Government may use tax incentives to Savings for retirement, education or to
encourage specific economic activities. purchase of any assets

Risk management Adaptability to changing laws

Assessing and managing the risk associated Regular reviews and updates are necessary
with different tax positions. to ensure continued tax efficiency.
Deductions that are allowed

Any conveyance allowance

01
due to travel.

02 Deductions under section 12.

03 Deductions under section

80JJAA for new employees.

04 Investment which are made in

Notified pension scheme.

Abled individuals will be

05 allowed traveling allowance.
Deductions
that are not 01 Housing Loan interest
under Section 24
allowed.
Professional tax 02

Standard deduction
03 on salary

Special allowances 04
under Section 10(14)
Deductions
that are not 05
Children education
allowance
allowed.
Helper and
reloaction allowance 06

Conveyance and
07 house rent allowance

Leave Travel
Allowance 08
 TAX EXEMPTIONS
A tax exemption is the right to have some or all of one's
income exempt from country’s taxation. The majority of
taxpayers are eligible for a number of exemptions that can be
used to lower their taxable income, while some people and
organisations are fully free from paying taxes.
 CASE STUDY
Background: Sarah is a 35-year-old professional working as a freelance graphic designer.
She earns income through project-based work and is considered self-employed. Sarah is
proactive about managing her finances and wants to optimize her tax position while
ensuring compliance with tax regulations.
Current situation: Sarah's income primarily comes from freelance graphic design projects.
She has a gross annual income of 8,90,000 rupees. Sarah incurs various business-related
expenses, including software subscriptions, equipment purchases, and a home office set
up. As a self-employed individual, Sarah reports her business income and expenses on
Schedule C of her personal tax return.
Computation of taxable amount with two different tax slabs

OLD TAX SLAB: NEW TAX SLAB:

Sarah as 8,90,000 as gross annual Sarah as 8,90,000 as gross annual
income income

1) 0 - 2.5 lakhs: NILL 1) 0 - 3 lakhs: NILL

2) 2.5 - 5 lakhs: 5 % 2) 3 - 6 lakhs: 5 %

250,000x 5%= 12,500 3,00,000x 5%= 15,000

3) 5 - 10 lakhs: 20% 3) 6 - 9 lakhs: 10%

3,90,000x 20%= 78,000 2,90,000x 10%= 29,000

According to old tax slabs Sarah has According to new tax slabs Sarah
to pay 90,500 rupees has to pay 44,000 rupees
Conclusion
Tax planning is a vital financial strategy that individuals and businesses
employ to optimize their tax positions within the bounds of the law. The key
objectives of tax planning include minimizing tax liabilities, optimizing cash
flow, and ensuring compliance with tax regulations. By strategically
organizing financial affairs, individuals and businesses can achieve long-
term financial goals, enhance competitiveness, and adapt to changing tax
laws.
Tax planning involves a range of considerations, such as taking advantage of
exemptions, deductions, and credits, as well as making informed decisions
about investments, expenses, and business structures. It plays a crucial role
in risk management, helping to mitigate the tax related risks. Moreover, tax
planning is not a one-time activity but rather an ongoing process that
requires adaptation to evolving tax laws and regulations. Staying informed
about changes in tax codes and seeking professional advice are essential
components of effective tax planning.
THANK YOU!