The time has come for professionals to adopt the ways to be self-employed and build own fortune. In an era when high school teenagers are building Instagram and YouTube fortune it gives us inspiration to build own consultancy. It is said that two things are certain Tax and Death. There are no boundaries to direct tax consultancy practice.
1. Start with freelancing
The first step is to create a customer base and solve small problems of your prospective clients. Help people to understand basic slab limits, tax saving deductions and exemptions. Tell entrepreneurs that companies have option to pay Tax at lesser rate of 25.17 percent under Section 115BAA. File ITRs of individuals. Start small and compound on the small daily efforts.
2. Suggest tax smart strategies
The government as well tax-payers both wants money to reach end users. A direct tax -consultant is a close confidant to suggest taxpayers the right ways to effectively manage taxes. Tell your patrons to park money into tax free instruments like PPFs, ELSS and tax saving bonds that compounds money into wealth in long term. Create HUF for managing family businesses, ancestral property and file regular returns to earn additional benefit of tax slabs and investment linked deductions under HUF.
3. Ensure payment of advance taxes and filing declarations
Under section 208 of the Income tax Act, every person whose estimated tax liability for the year is Rs. 10,000 or more, required to pay advance tax being 15 percent, 45 percent, 75 percent and 100 percent by 15 June, 15 September, 15 December and 15 March respectively. Non-payment of advance tax results into charging of interest at the rate of 1 percent both under section 234B and 234C. Bonus hack, senior citizens not having any income from business or profession are not liable to advance tax.
4. Tax deductions
Study and understand tax deductions. There are many tax deductions within the Income-Tax Act, if claimed, can saves a lot much in tax. There are still and a lot many people who does not even claim simple deduction on saving bank interest under section 80TTA. Paid house rent, claim HRA or deduction u/s 80GG; bought an electrical vehicle on loan get deduction u/s 80EEB; bought a new house claim interest deduction upto 2 lacs under section 24 and claim principal portion u/s 80C.
5. Reply timely against IT notices
The consequences of non replying to income tax notices are hefty. No standard form is prescribed to reply to the tax notices. However, the reply letter must include some basis elements name, address & jurisdiction of officer concerned, name and PAN of the tax-payer / assessee, assessment year, subject line indicating clear nature of notice and response.
Bonus Tip – Stay connected to clients
The key to build a tax practice is building a clientele. It is important to stay in constant touch and communication with the clients. The clients and appreciations spread by word of mouth and so does the consultancy.
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