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

Minimizing taxliability Ensure compliance

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

Optimize financial resources Enhance cashflows

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

Risk management Adaptability to changing laws

Assessing and managing the risk associated with Regular reviews and updates are necessary to ensure
different tax positions. continued tax efficiency.
LATEST DEVELOPMENTS
 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 income Sarah as 8,90,000 as gross annual 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 to pay According to new tax slabs Sarah has to pay
90,500 rupees 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!