STRATEGIC TAX

MANAGEMENT
INTRODUCTION
TAX PLANNING

► Analysis of financial situation/plan from a tax perspective

► Ensure tax efficiency
► An important part of a financial plan – reduce tax liability
► Arrangement of one’s financial affairs to avail of exemptions, deductions, concessions,
relief and rebates permitted under the law
Why do we need it?

► Maximize cash inflow, minimize cash outflow

► Increase profitability
How can it be exercised?

► Before the accrual of income

► Should be resorted at the source of income
► Choice of organization
► Choice of location
► Residential status of a person
► Choice to lease or buy an asset
► Capital structure (debt:equity)
Difference between tax planning and tax
evasion and tax avoidance

Tax Planning Tax Avoidance Tax Evasion

Legality Perfectly legal Legal illegal

Purpose Ensure tax efficiency Minimize tax Not pay tax

Nature Use the law to reduce Avail loopholes in the Employ illegitimate
tax liability law means
exercise Done before tax Done before tax Done after tax liability
liability liability
Impact Penalty or Penalty or
imprisonment (if rules imprisonment
are violated)
Advantages of Tax Management

► Minimize tax liabilities

► Ensure economic balance
► Leverage productivity