March was here and it went… You may have planned for taxes, or so you thought. We are sure some of you had to run around to make sure you could save on taxes in a last ditch effort.

But if you still haven’t got around to preparing your taxes… Now might be a good time to start! It is also the best time for investing in relevant securities and instruments to avail maximum tax savings of your hard earned money.

Investments made in the period from 1st April this year to 31st March next year can only be claimed as a deduction from the total income.

Here are a few tips to help you save taxes for your small business….

Simple Ways To Save Taxes For The Year

Follow these tips to save on your taxes!

1. Pay Advance Tax:

Advance tax is to be paid by every individual if his tax liability net of TDS exceeds Rs.10,000.

The last due date for the payment of Advance tax is 15th March but even if you pay after 15th March but before 31st March, it will be treated as an advance tax payment.

Penal interest @1% per month will be levied for the late payment of advance tax.

2. Claim Depreciation:

You can claim depreciation on any asset purchased by you in the previous year and put to use for more than 180 days, at the prescribed rate.

Even if the asset is used for less than 180 days, depreciation can be claimed at 50% of the prescribed rate.

So if you are planning to invest in an asset, do it before MArch, to claim more depreciation. Of course, do it only if you need to invest in one right away.

3. Purchase Inventory:

One of the ways to save taxes is to show more expenses and therefore, fewer profits.

If you have cash in hand, you can take a stock of your inventory and purchase them.

Stock up on supplies used regularly in your factory or warehouse and replenish to a reasonable amount.

4. Claim Deductions Under Section 80C:

Payments for the investments being made for tax saving purpose should be made before 31st of March in order to avail the tax benefit in this Financial. But you should be planning it right from the start of this financial year. Since investments also mean returns… So you might as well start it soon, without waiting for March!

Everyone should estimate the tax payable by them and analyse to reduce the scope of tax outgo by making further investments in tax saving options. Everyone should look out for the following deductions.

Investments made in any of the following will reduce your income maximum up to 1.5 lakhs, therefore helping you save taxes!

• Equity Linked Savings Scheme: ELSS are diversified mutual fund schemes which have a lock-in period of 3 years. ELSS invests in share market and have the potential to earn high returns.
• Tax Saving Fixed Deposit: Like any other Fixed Deposit in a bank, this investment comes with a lock-in period of 5 years.
• PPF Account: Public Provident Fund is one of the oldest schemes by the Government. Anyone can open a PPF Account in SBI, Post offices or other banks. The interest earned and the proceeds from maturity are all exempt from tax, but it comes with a lock-in period of 15 years.
• Senior Citizen Savings Scheme: Aimed at the senior citizens of the country, this Government scheme gives regular income to the elderly.
• National Savings Certificate: A Post Office small savings scheme, NSC are issued for a period of 5 years.

5. Purchase Health Insurance:

Under Section 80D, the premium paid for the health insurance for yourself, spouse and dependent children can be deducted from your income up to Rs. 25,000. If you take health insurance for your parents, an additional Rs. 25,000 is allowed as a deduction, which means a total of Rs. 50,000 can be claimed as a deduction under this section.

You could also purchase an insurance plan for your office boys or such other staff… and earn their lifelong loyalty!

6. Invest In National Pension System:

Investment in NPS gives you the deduction of Rs.50,000 under section 80CCD (1b) in addition to the overall limit of Rs.1.5 lakh under section 80C.

In other words, the combined benefit of 80C plus 80CCD (1b) is Rs. 2 lakhs.

Only in few cases withdrawal is allowed after 10 years subject to certain conditions. So investing in NPS is beneficial only if you have surplus funds.

7. Giving Away Money For Charity Under Section 80G:

You can save taxes through donations. Some donations are eligible for 50% deductions.

Donations to the PM relief fund, some notified NGO and Political parties can give you 100% tax benefit.

Donation can also be made to scientific institutions and religious bodies.

8. File Your ITR On Time:

The Income Tax Department recommends people to file tax returns on time if they want to avail benefits.

One of the prominent benefits is to carry forward the losses on your income earned from business.

You can carry forward business income losses for a period of 8 years, and so it can be set off against the income earned in the coming years if it cannot be adjusted in the current year. This benefit is available only if you file your tax returns on or before the due date.

Plan In Advance For The Upcoming Year…

Save yourself the last-minute panic by planning for the next year in advance! Follow simple tips like paying municipal taxes by cheque, recording all cash expenses (especially wages paid to unorganised labour, deducting tax at source, etc to save taxes!

Consider Hiring An Expert…

Even if you think you can manage to prepare your taxes on your own, a tax professional is more affordable in the long run. A professional has seen everything and knows how to get you the most favourable tax deductions and benefits.

Instead of hastily preparing books of accounts close to the deadline, it is better to hire an expert who lets you know the maximum tax that can be saved within the permissible limits and is well aware of all taxations rules & laws.

It is very important for every small business owner to record each transaction very carefully in their accounts and avail the benefits of various deductions to attract less tax.

Get in touch with Gromor today to avail unsecured small business loans to expand your business!