URGENT! how to reduce IT liability

This query is : Resolved

shruti (Querist)
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18 December 2007 abc is propreitor firm. pl adv -
1) in wat way he can reduce tax liability if his income is say 20-25 lac?
2) is gift gvn to his parents, taxable ?
3) loan gvn to o/sider is taxable ?
4) this proprietor has taken loan for his house, wl repayment of that loan treated as expense??
5) if this proprietor pays rs. 6 lac to some person, under wat head it can be shown as an expense and how much minimum tax has to be deducted?

pl adv.

rgds
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CA. Vineet Grover

CA. Vineet Grover (Expert)
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18 December 2007 Hi Shruti,

We are here to advise on the tax planning and not tax evading.

There are numerous ways in which you may save tax but never opt for any means to evade tax.

Following are the replies to your queries:

(1) he can show expenses of business. please note that if the net profit is less than 5% of turnover, tax audit shall be applicable. Further, the file may undergo income tax scrutiny.

(2) an individual may gift to his parents in his individual name and not from the firm. Further, gift in no case shall reduce tax liability. Its a depletion of capital.

(3) interest on loan given to outsider is taxable but giving of loan shall in no ways shall reduce your tax liability. It will only effect your fund position.

(4) the proprietor shall get benefit of interest payment on home loan under the head income from house property u/s 24 and principal repayment of loan u/s 80C.

(5) it is not ethical to do such practices. There should be a sound business need / requirement for providing or taking loan. The same has to justified before givibg any sum to any individual.

Rgds/

Vineet

shruti

shruti (Querist)
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18 December 2007 hi vineet,

thanks for yr prompt reply. pl adv wat shd be done. also as u said there r numerous ways to save tax, pl adv on that also.

awtg...

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shruti

shruti (Querist)
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18 December 2007 vineet,

also want to know how much tax do abc has to pay if profit is btwn 20-25 lac. also note -
1) shpr has already deducted tds of rs. 1.50 lac while making payment
2) advance tax paid is 75000/-
3) expenses wl be around 4 lac.

so how much more they wl hv to pay.

pl adv.