It’s basic human nature to put the tax bill in the back of your mind and focus on generating income. Until they find out that they have a huge tax bill to pay, usually at the end of a great year. March is when people start figuring out that the taxes are about to wipe out their this year’s hard earned money. That is the epiphany moment when this question pops up in their mind ‘How can I avoid tax?’ or ‘How can I reduce my tax liablility?’
The unfortunate answer that we have for this question is that you should have asked us this question a year back. Don’t confuse tax avoidance with tax-evasion. Tax evasion is a crime, but tax avoidance through proper tax planning is legal.
“an ounce of prevention is worth a pound of cure”
Reduce your Future Taxes
You should start putting together your tax optimization strategy well before you actually start earning the money. Your ability to reduce this year’s taxes is limited, but there are plenty of things you can do to avoid high tax bills for next year and the years that will follow.
What’s happened has already happened. There could be a few exemptions that you might be able to take advantage of to reduce your current tax bill. There are few things that might have been overlooked, maybe your business shouldn’t have been a tax resident in India in the first place or maybe you should have done an income allocation to save a part of it from being taxed.
You probably aren’t going to have much head room to reduce your current year’s tax bill. But with proper planning- however, you can change your future for good. We can together create a strategy that will help reduce your effective tax rate.