Question

"Tax planing" is a legal and moral way of Tax saving" Discuss the statement and describe its importance.​

Answer 1

Answer:

Tax planning schemes have been generally regarded as acceptable. However, today, some tax planning activities are deemed to have crossed acceptable limits and are termed aggressive. Such aggressive planning are in many cases, likened to tax avoidance procedures used by taxpayers to gain strategic advantage.

Proponents of tax planning schemes, aggressive or otherwise, argue that taxpayers have the right to order their tax affairs in such a way that tax is minimised so long as such actions are within the ambits of the law. However, others argue that taxpayers must also consider the impact of these schemes on the immediate environment.

This thus brings up the concept of tax morality. Morality connotes standards of good or bad behavior, fairness, honesty, etc. that each person believes in, rather than laws. Tax is seen as a means of giving back to the society and a collective modality for improving the society. Thus, where a taxpayer benefits from being in a society, complies with applicable tax laws but takes advantage of the loopholes to ensure minimal tax payment, would he be considered to be paying his fair share of tax? Can this be distinguished from efficient planning based on

Answer 2

Tax planning is a very important process for any business or an individual in order to save his taxes. Taxes are the compulsory payment which has to be given to the government for the mutual benefit of the society.

• Tax planning is a financial plan which helps a company or an individual to pay the lowest taxes possible.
• Taxes can be saved by proper structuring of the salary and proper planning of Investments. Tax planning is an integral part of our financial plan.