Question

Write Short Notes on Justification of Tax Planning and Management.

Answer 1

The difference between tax planning and tax avoidance can be drawn clearly on the following grounds: Tax planning refers to a mechanism through which one can intelligently plan his/her financial affairs in such a manner that all the eligible deductions, exemptions and allowances, as per law, can be enjoyed

Answer 2

• Tax Planning :- Tax Planning can be understood as the activity undertaken by the assessee to reduce the tax liability by making optimum use of all permissible allowances, deductions, concessions, exemptions, rebates, exclusions and so forth, available under the statute. It helps in minimizing Tax Liability in Short-Term and in Long Term.

• Tax Management:- Tax Management deals with filing of Return in time, getting the accounts audited, deducting tax at source etc. Tax Management relates to Past, Present, Future. Past – Assessment Proceedings, Appeals, Revisions etc. Present – Filing of Return, payment of advance tax etc. Future – To take corrective action. It helps in avoiding payment of interest, penalty, prosecution etc.