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Tax planning is managing and arranging your finances in a way that minimises your tax liability.
This is done by making the most of all permissible allowances, deductions, concessions, exemptions, rebates, etc. under the Income Tax Act, 1961.To plan your taxes, you must first know your total income and your total taxable income. Next, you must make tax-saving investments to avail of the deductions and exemptions.
While these are the basics of tax planning, the concept is much more than just about saving taxes. Smart tax planning involves starting early and having a long-term perspective for meeting other financial Goals too.