Page 84 - DCOM301_INCOME_TAX_LAWS_I

Unit 3: Tax Planning: An Introduction

3.5.2 Areas of Tax Management Notes

The main areas of tax management are as follows:
1. Deduction of tax at source can be done with respect of income from salaries, winning from
lottery, horse race etc.

Employer seeks for TDCAN and employee for Pan Card.
TDS should be deposited in government treasury.

Employer should furnish to the employee a certificate regarding TDS.
Employer should furnish quarterly and annual returns regarding TDS.
2. Payment of Tax on the basis of following:
Advance payment of tax.
Tax on Self Assessment

Payment on Demand
3. Audit of Accounts on the basis of the following:
If business income exceeds 40 lakhs.

If business income exceeds 10 lakhs.
4. Fulfilment of conditions to claim deductions.
5. Furnishing return of income.
6. Documentation and maintenance of records.
7. Review of Orders.

3.5.3 Differences between Tax Planning and Tax Management

While tax planning and tax management correlate with each other, the two aspects of taxes have
several differences. The primary difference between tax planning and tax management is the
time frame in which each part is conducted. The tax planning takes place ahead of time, while the
tax management is the implementation of the plan.
The first primary difference between tax planning and tax management is the requirements.
While tax planning is not a requirement for either a business or individual, tax management is
a requirement. Every individual and business in the United States is required to manage taxes,
which includes filing the appropriate state and federal tax returns.
The second primary difference between tax planning and tax management is about tax liability.
When a business or individual goes through the tax planning process, they are trying to minimize
the tax liability of the entity by planning deductions, purchases and expenses ahead of time. Tax
management, however, involves making sure that when the tax plan is implemented, that it is
according to the tax laws and regulations.
The third difference between tax planning and tax management pertains to liabilities. Tax
planning involves taking the actions necessary to minimize the tax liabilities of the business or
the individuals. Tax management on the other hand is about avoiding the payment of interest or
fees for not abiding by the tax laws and regulations.
The fourth difference between tax planning and tax management is the time frame. Tax planning
is an action that is taken in the present but relates to the future. Tax management, on the other

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