Meaning of Tax Planning as per Income Tax Act
Tax Planning Tax planning is an arrangement of one's financial affairs in such a way that the burden of taxation on the assessee is reduced to the minimum without violating in any way the legal provisions. The Income Tax Act provides for certain sections which allow a person to save tax legally by adopting the path shown in the sections. When a person takes shelter behind these sections, provisions and rules and as a result reduces his tax liability it is called Tax Planning. In tax planning maximum advantage is taken of all tax exemptions, deductions, concessions,rebates, allowances other reliefs or benefits permitted under the Act. Tax Planning is a legitimate right of the tax payer. However it is not an inherent right of the tax payer. It can be exercised only if it is provided under the taxation law. Thus Tax Planning can be done only if the tax laws contains provisions in this respect.