Business Tax Savings Tips for Business Owner & Startup

5. Always Deduct Tax at the Source

If you take services from providers and make payments for them, always remember to deduct the tax at source. If you fail to do so, the expenses will become non-admissible, resulting in an unnecessary tax burden. For instance, if you pay Rs 3 Lakh to a service provider and do not deduct a TDS of 10%, the whole Rs 3 Lakh will become a taxable profit. 

1. Invest the Surplus in Marketing

Business marketing expenses are tax-deductible. So, if you are not investing enough in marketing, it’s high time to implement the right strategies to reach out to more potential customers. It will not only increase your business but also provide tax benefits.

7. Avoid Cash Transactions

To encourage digital transactions in the country, the Income Tax Department provides tax benefits if you pay your workers' salaries digitally. If you make a cash payment of Rs 20,000 to a single individual, it becomes non-tax deductible in your account books. The income tax department will nullify such transactions, increasing your tax liability. Hence, you should always pay your employees via bank transfer.

8. Depreciation

If you operate a company in the manufacturing industry, you can obtain additional tax benefits for your business. As per Income Tax Act, you can claim 15% depreciation on machinery, in addition to this, 20% depreciation in the first year. So, you can benefit from a total depreciation of 35% (15%+20%) in the first year.

9. Save Tax by Donating

If you are a successful business owner, you can donate some part of your income towards a social cause. Apart from giving you a sense of satisfaction, donating money also provides tax benefits. Donate to a registered charitable organisation or PM’s relief fund to save tax money by donating. Donating to a political party also provides tax breaks. 

10. Use Housing Loan Interest to Claim Tax Benefits

By taking a Home Loan, you can not only build a long-term asset with high growth potential but also become eligible to claim tax benefits. Under Section 80C of the Income Tax Act, you can claim a tax deduction of up to Rs 1.5 Lakh. However, you must link your company with the PAN to avail of this benefit.

Conclusion: 

As a legal taxpayer in India, you must abide by the laws and pay taxes to operate your business smoothly. That said, take advantage of these business tax savings tips and plan your taxes smartly to save substantial amounts of money. Also, if you need additional funds for your business, you can apply for different types of Business Loans from Hero FinCorp and get the required funds to operate your company in a smooth and hassle-free way. You can use a commercial loan calculator to plan your repayment efficiently and become debt-free without stressing your finances. 

FAQs

• What are tax exemptions for small businesses?

Small business owners must pay different types of taxes to stay operational in India. However, the Income Tax Department provides several ways to save money on tax obligations. These are called tax exemptions that SME owners can use to reduce their tax burden.

• Is tax paid on turnover or profit?

If the sale transactions attract capital gains tax, it will not be a part of the turnover. Turnover is the gross revenue amount recognised in the P&L account, supply, and distribution of goods and services.

• What is the taxable income for Pvt Ltd company?

A private limited company with a turnover of under Rs 400 Crore will have a tax obligation of 25%. It is 30% if the turnover exceeds Rs 400 Crore.