Skip to main content

How to save on Tax for professionals?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

Ignoring the claims you are entitled to could result in a big tax outgo that's easily avoidable

Action Plan

  • Capture income from regular clients and customer services correctly and promptly
  • Maintain a log book for official travel and related costs
  • Claim deduction on the rent paid for residence
  • Support TDS with certificates issued by the entity that deducted taxes

***

In this world nothing can be said to be certain, except death and taxes," said Benjamin Franklin. While the former is inevitable, efficient planning can soften the latter's blow. Here, we examine some key tax-planning strategies that professionals such as lawyers and doctors may adopt. As a starting point, note that 'income net of expenditure' is taxable under the head 'profits and gains of business or profession'.

Capturing income and expenses. At the outset, income from regular clients and from customer services should be captured correctly. Income/honoraria from activities such as giving lectures, if applicable, should be offered to tax.

Office expenses, cost of utilities, staff expenses, travel and telephone expenditure and Internet charges incurred for professional purposes are some examples of deductible expenses. Professionals need to constantly update themselves technically, but related expenses such as attending seminars and conferences, updating professional skills and knowledge, professional membership fees and subscription costs for professional journals, tend to be ignored in computing deductible expenses.

Most self-employed individuals have to incur some capital expenses depending on the nature of the profession, e.g., office equipment such as computers, diagnostic instruments, furniture and fixtures. Depreciation for these assets can be claimed at the rates prescribed: where the asset is put to use for a period of less than 180 days in the year of purchase, the entitlement for depreciation will be at 50 per cent of the prescribed rates. Books, being annual publications, are entitled for a depreciation of 100 per cent.

Getting documentation right. Complications arise when the professional uses his property for both residential as well as professional purposes. In such cases, a reasonable proportion of the actual expenses incurred on maintaining the property, related taxes and utility costs need to be attributed to the professional services rendered. Same is the case when the professional uses his own car for commuting, for both official and personal purposes. Maintaining a log book for official travel and related costs is a must. Invoice copies of expenses incurred may be stored and produced to the tax authorities later to substantiate these. The tax laws mandate maintenance of specified books of account if one's professional income/gross receipts exceed the prescribed limits. Also, a tax audit is mandated if the gross receipts exceed Rs 15 lakh during the financial year.

Knowing deductions available. Employer-funded retirement plans in the form of gratuity and provident fund do not exist in the case of professionals. Therefore, there is an even greater need for conscious savings and efficient retirement planning—such savings for a rainy day can also help to reduce taxes if the investments and contributions are made in specified instruments. Getting a health and a life cover also helps. The expenditure incurred by a professional towards paying rent for his residence (in excess of 10 per cent of his total income) can be claimed as a deduction, subject to a ceiling of Rs 2,000 per month or 25 per cent of his total income, whichever is lower.

Exercising caution. If income has been subject to tax deduction at source (TDS), it needs to be supported by certificates by the person who has made the deductions. Income tax due (over and above the TDS) is required to be paid in advance over three instalments during the financial year. Timely payment of taxes helps in reducing the interest cost. However, claiming a refund arising out of excess TDS on receipts could be tedious and it may impact the cash flow. Hence, a certain amount of planning is important in the payment of tax.

Approaching the tax authorities for a certificate for lower TDS could be considered if the TDS is expected to be more than the tax payable. With the processing of returns through the Central Processing Centre, the issue of refunds could be faster if tax returns are filed electronically. This should be kept in mind while filing the return.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund Tata Mutual Fund has decided to merge Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund, with effect from January 16, 2015.   Investors of Tata Indo-Global Infrastructure Fund can redeem/ switch out units from December 13, 2014 to January 12, 2015 without paying any exit load. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund A...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now