How to save tax legally?
Tax is a compulsory financial charge levied by the government on a person or an organization to collect revenue for public work by providing facilities and infrastructure. Taxes are levied by the government on their citizens to generate income to boost the economy of the country. The collected amount is used for the development expenditure programs of the country. No one can be released from tax liabilities. It is compulsory payment. It is imposed by the Tax authorities. And to pay the Tax is our liability.
Table of Content
- About Tax
- Direct Tax
- Indirect Tax
- It’s Example
- Tips to save tax legally
Business/Corporate Tax is a tax imposed by the government on the profit of a corporation. The tax is paid on a company’s taxable income after deducting the Interest of the company loan. And the tax is directly imposed directly by the company to the customer or client.
Taxes are of two types i.e Direct and Indirect Taxes
I. Direct tax
It means the tax which is directly imposed by the government on the incomes and profits of the individuals or corporations.
- Income Tax
- Corporate Tax
- Wealth Tax
- Expenditure Tax
- Gift Tax
II. Indirect Tax
Indirect tax means the tax imposed by the government on goods and services and paid by the customers indirectly.
Some of them are
- Sales Tax
- Service Tax
- Entertainment Tax
To pay the tax to the government is not that much fun. That’s why people are searching for opportunities to save taxes legally. No one likes to miss the options to save the tax. Today in this content we will share the l tips to save the taxes legally which are mentioned below
- By claiming the expenses
- By making charitable donations
- By making a plan for a loan
- Save Tax through salary expenses
- Write off for business travel expenses
- By showing the annual losses
- Contributing to a retirement account
- Write off for medical expenses
- By claiming the expenses
People can claim the expenses that they have made in the organization. The process of claiming expenses is also the legal option to save the tax.
2. By making charitable donations
If you donate some amount to charity, the tax will be exempt. You need to take the donated amount bill safely for the proof. This is also the better tip to save the tax legally.
3. By making a plan for a loan
Making a plan for a loan( home loan and Automobiles loan) in the name of the organization. This process also helps to reduce the tax. Some of the income will be deducted in a loan which helps to save the tax legally.
4. Save Tax through salary expenses
Paying a salary through office account to the employees helps to reduce the tax of the organization. We can show the salary expenses which save the tax legally.
5. Write off for business travel expenses
If an organization combines vacation with business travel, they can claim on this to save the tax. It is good to make a budget plan for the traveling expenses which helps to save the tax legally.
6. By showing the annual losses
If you show the annual losses of the organization you can legally save the tax.
7. Contributing to a retirement account
The system of contributing to a retirement account to safeguard the future of employees by the government monthly or annually is also a legal process to save the taxes. It is the top tool to reduce the tax legally.
8. Write off for medical expenses
An organization can claim on the medical expenses through premium paid at health insurance. This is also the better option to save the tax legally. It helps to lower the taxable income and tax liability.
The above-mentioned options are the smart and legal tricks to save the taxes of the organization. You can try these tips to save the taxes of your organization legally.