I am a small businessman, and I have recently started my business. My yearly turnover is 15 Lakh INR. How can I save my taxes?
If you are a small businessman with income of 15 Lakh INR annual income and thinking to reduce your taxes, here is what you should do.
If you are the only owner, you may register your business/company as a self-proprietor. Open a current account. Do all the business transactions using your current account including all the expenses.
Now, what I would suggest you do is:
1. Pay yourself a yearly salary of 4 Lakh from the company’s account.
2. Also, pay salary to your family members, it can be your mother, father, and even wife. Pay them upto 4 Lakh.
I guess, after paying the entire 15 lakh profit to yourself and your family members, you will have no profit. And that way, you will end up paying zero tax.
3. Keep the bills of all kinds of expenditures that can be claimed. This will help you reduce your earnings.
Now there is a small catch.
1. If you are earning 4 Lakh INR, you may need to pay individual income tax. However, you can invest in tax saving schemes and save upto 1.5 Lakh INR without paying any tax. Tax saving schemes can be LIC, ELSS, Provident funds etc. As per section 80C of Indian Tax, you can claim exemption from taxes upto 1.5 Lakh INR if invested in the above schemes.
However, it is always good to pay some taxes to the government for the smooth functioning of the country. Remember, the country would develop only if we pay our share of taxes.