Press ESC to close

How Can Tax Planning Save You From Huge Losses

Tax planning has become a very hot topic in today’s scenario. Every Indian person, LLP, corporate, partnership firms AOPs, BOIs, and others are bound to pay taxes on the due date. On the other hand, it lowers take-home earnings and ensures quality of life, especially regarding costs. In addition, it can help the state finance numerous programs and initiatives for its citizens if you’ve started your first business in India.

In this scenario, it’s crucial to thoroughly conduct taxes for the brand-new business so you can reap the best advantages of exemptions, deductions, and tax credits. Before you start establishing and diving into the new venture and its activities, it is crucial as an entrepreneur that you gain some knowledge about tax planning. Find out more things to factor into your tax planning if you plan to or have just started setting up an enterprise.

Tax Planning

In light of taxes becoming a burden for all individuals, making sure that taxes are paid on time for receiving the most deductions. Suppose you’ve just established a business in India. In that case, Tax planning for your business is vital since it can assist you in reducing your financial burden by ensuring that your tax planning is not only prudent and permitted but also promoted by tax authorities themselves.

New companies are vital to the nation’s development, growth, and development. New businesses generate additional revenue, jobs, and investments and make the most efficient utilisation of resources. Therefore, these enterprises must be adequately supported and guided. The Income Tax Act 1961, which regulates the tax regulations and rules of the country, provides numerous options that could help companies save taxes while also contributing to the development and growth of the economy.

A top-quality business advice recommendation from experts, particularly those that are newer, is to take advantage of the tax-saving options to save funds during the beginning period of the company. New businesses must be extra careful when planning their tax strategy. Tax planning should begin when a business is founded. Let’s discuss the meaning, importance, and various ways a new company can plan its taxes to maximise efficiency and tax savings.

Understanding the tax planning process for business

Knowing how to plan your tax for business is vital since it is a crucial aspect of managing finances. Tax planning involves making use of your resources in a way that your tax liability is minimised. It involves systematic, strategic, and deliberate planning costs, investments, operations, and other aspects to reduce or minimise the tax burden of the company.

CA for tax planning for companies or individuals can assist you to a large extent. It’s an analysis of financials designed in the context of taxation.

The importance of Tax Planning for Business

Suppose new businesses or startups take adequate care concerning tax planning or have to pay less or even no tax to government officials. In that case, the development and growth of the country are positively affected. The government is faced with a deficit in its finances, which causes new tolls on people.

However, the strategic tax planning process makes the most efficient use of financial resources and reduces the business’s tax liabilities by utilising various deductions, exemptions, investments, and other benefits in terms of financial leverage for the company and the government.

  • A tax-efficient tax strategy will ensure the smooth running of the company.
  • Tax planning ensures that the company is safe from legal obligations and problems.
  • A company can dramatically lower its tax burden by implementing the right tax planning strategy. The tax savings could be put to use for a variety of investments.
  • Tax planning assists companies to save money. At the beginning of an upcoming business, these savings can be advantageous.
  • Tax planning will allow businesses to maximise the use of concessions and tax credits.

These are the primary benefits of tax planning for newly established companies. Therefore, a strategic tax plan for new companies in India assists the company in achieving the best ROI. Thus, all employees of the company are also happy. The next step is to discuss different strategies for tax planning that businesses starting should consider reaping the advantages that tax planning can bring.

Tax-planning Strategies to Plan Your Taxes for New Companies

If you’re starting a startup business and want to establish a tax-efficient strategy for companies operating in India, these six tips will assist you greatly.

Selecting the best business structure

Following the Ministry of Corporate Affairs, various business organisations operate in India—for instance, OPC, Pvt. Ltd., LLP, Sole Proprietorship, etc. Selecting the best business structure can minimise tax obligations and enhance your tax strategy for planning. This way, deciding to know the tax burden for the design of your business will assist in implementing a tax-efficient strategy for new companies.

Write off your initial expenses.

If you are beginning your journey to becoming an entrepreneur, there are a variety of expenses associated with establishing your company. The initial costs fall into the category of capital expenditure. The capital expense incurred when installing a new business is deductible as a deduction for the first five years in five installments under section 35D in the Income Tax Act 1961. A company’s maximum deduction can be at most five percent of the value of the project or capital investment in the business’s operations.

Plan investments

Don’t wait until the end of the tax assessment year to allow you to begin thinking about tax-saving investments like ELSS PPF and tax-saver FDs. Instead, look up, research, and plan your investments frequently during the year you are investing. So that when you complete your ITR, you’ll have the opportunity to claim a vast selection of tax deductions and exemptions. You can also go for online CA services that can assist you at each and every stage of your tax planning.

Claim all deductions possible.

If you’re a startup and are just beginning your journey as an entrepreneur, ensure that your books are in order and you can take advantage of any possible deductions. In addition, aside from taking advantage of the deduction for the initial cost following Section 35D in the Income Tax Act, you may also be eligible for exemptions and deductions, as described within Chapter VI of the Income Tax Act, that depends on your investment and other expenses.

Suppose you’re tax planning for business operations in India and declare your home as your office. In addition, you may take advantage of deductions for business expenses resulting from running your business, as well as charitable contributions, which can be claimed as tax deductions per section 80G under the Internal Revenue Tax Act. If you think that these are very tedious tasks, then opting for CA services online is a reliable option.

Cheque payments to municipal taxpayers

Paying municipal taxes for the premises of your office in cash could result in the disappearance of the receipts. In contrast, paying municipal taxes with a cheque allows you to get an exemption. 

Record cash expenses with care.

Though startups are growing in India, a lot of them operate in the unorganised sector, which pays the workers in cash. Indirect wages comprise 40% or more of your operational expenses. 


When an industrial company puts a piece of newly-built equipment in place, it is possible to apply for additional tax exemptions. These are just a few strategies that could help in tax planning for companies operating in India.

Employing experts, paying taxes ahead, and investing in PPF and other insurance premiums are also helpful with tax deductions for businesses operating in India.

Ritesh Mishra

Hi, My name is Ritesh Mishra, a Practicing Advocate having several year experience in Business Consultancy, Secretarial Law, Intellectual Properly Law, Taxation, Business Modeling and other allied matters. I have been serving Small and Big Industries since several years. I have also been serving industry in various kind of licensing and liasoning works across India.

Leave a Reply

Your email address will not be published. Required fields are marked *