Tax Planning Considerations in Relation to Business :

Tax planning of the various areas in which tax payer will have to take appropriate decisions to ensure that the incidence of tax in respect of his income chargeable under the head ” Profit and Gain from Business or Profession ” is reduced to the extent possible, by taking advantage of the various allowances, deductions and other tax concessions provided under the law.

For a new business, the spheres in which the question of tax planning is relevant are as follows:

(i) Form of the organisation

(ii) Nature of the business

(iii) Location of Business

(iv) Financial Structure

(v) Acquisition of plant and machinery and other fixed assets

(vi) Setting up and commencement of business

Each of these aspects will be considered briefly in the Links. In addition, there is lot of scope for planning with reference to the method of accounting to be employed and the various deductions and special incentives provided under the Income-tax Act, 1961.