Startup expense – professional charges paid for incorporation, drafting of MOA and AOA, Printing cost of documents, fees paid to ROC, stamp duty etc.

Salary to director – For example, Let us say XYZ private limited company is making a profit of 5 lacks which is to be shared among the founder/director in equal ratio. So Instead of showing 2.5 lakhs as profit-sharing; one can show salary of Rs. 2.5 lakhs to each director. The result of the same will be that taxation on XYZ Pvt Ltd will be nil as there is no profit left and also no taxation on salary also as there is no tax up to income of Rs. 2.5 lac for an individual.

Sitting fees to director– The rules notified under section 197 of companies act 2013 says, “a company may pay sitting fee to a director for attending meetings of board or committee thereof. Such sums as may be decided by the BOD thereof which shall not be exceed 1 lakh per meeting of the board or committee thereof.” As per the clause (1)(ba) in section 194j of income tax act,1961, TDS on any remuneration or fees or commission by whatever name called shall be liable to be deducted @ 10%.

Rent Expense – Just make a rent agreement in name of owner, start transferring rent and book rent expense in company’s book which eventually has the same impact as discussed in previous points. Here also you can book dual save of tax.

Capitalization – So, of you buy an equipment for the office like laptop, printer, furniture which usually has the life of more than year, you should book them as fixed asset in book which ultimately gives you tax benefits in over the years.

TAX PLANNING crossword written on notebook page, red pencil on the right. Motivational Concept image

Family member’s salary– Whenever you start a business, you usually look for assistance and guidance from your family members and friends. In fact some family member usually help you in your business throughout your struggle and they are not doing it for any monetary benefits.

Entertainment Expense – Get at flat discount of applicable tax rate on your party bill by book keeping the same in books and get your tax saved.

Director’s vehicle expense

Meeting expense – These expenses include taking a client to dinner, to a theatre show, or to a sporting event. These expenses are usually tax- deductible. Also, as for your business purpose,

Above expenses are easy ways for saving 30% tax of companies. But just booking the expenses won’t work that way, the above expenses required proper documentation and planning to take a maximum and true benefit of it but that is really worthy doing.

Filing return on time. You can carry forward business income losses for a consecutive 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 when you file your tax returns on or before the tax filing due date.

Author Bio

Qualification: CA in Job / Business
Company: Chemster Foods Industries limited
Location: delhi, New Delhi, IN
Member Since: 13 Dec 2019 | Total Posts: 5

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January 2021