7 Tips on How Small Businesses can Save on Taxes

#1

Pay Municipal Taxes by Cheque

Municipal taxes paid during the year are eligible for tax deduction. Business owners often pay municipal taxes in cash and do not keep a copy of receipts of the same. Use a cheque to reflect your payment in your bank statement & claim tax benefits.

#2

Show Your Travel Expense as Business Expense

If you frequently travel for business purposes, file the expenses to the company’s account & show it as a business expense. Trust us, this would help you a lot while filing IT Returns.

#3

The TDS Factor

Business owners shouldn’t forget to deduct 10% at source (TDS) whenever they are paying for the services received from a third-party vendor. In case you forget, the entire amount won’t be considered as your expenses and increase your tax burden.

#4

Cash Payments

Avoid making cash payments above ₹20,000/- in a day to a single person. ITA disallows the deduction of expenses if paid in a day to a person exceeding ₹20,000/- other than by way of cheque or draft. However, there are certain exceptions under rule 6DD where this isn’t applicable.

#5

Capital Gains Exemption

Sections 53 to 54H provide exemption on capital gains if sale proceeds realised are invested into assets specified in the respective sections.

#6

Depreciation

The Indian Income-tax act provides multiple benefits to the entrepreneurs involved with manufacturing enterprises—for example, additional depreciation, specified business under section 35AD, etc.

#7

File ITR on Time

This goes without saying. Filing ITR on or before the due date will let you enjoy the benefits of carry forward of losses on business income.

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