Few Awesome tips for Tax Planning in a Private Limited

admin 26-02-2020

Few Awesome tips for Tax Planning in a Private Limited


This article explains various tips that how is a Private limited company save its tax in a legal manner and here we go:-


1.    Preliminary expenses/ Startup Expenses- These are the expenses incurred for incorporation of a company such expenses are professional charges paid for drafting MOA and AOA, printing cost of documents, stamp duty, fees paid to ROC.


2.    Salary to a DirectorEasiest way to save tax is to give Salary to their director. Instead of sharing the profits as dividend, share the profits as salary because it is an allowable expenses under Law and Income Tax.


3.    Setting Fees of Director       

                                                   i.     The payment of a fee to a director of the company for attending the board meeting is called setting fee.

                                                 ii.     The amount should not be exceed 1 lakh per board meeting or committee.

                                               iii.     Any fee or remuneration or commission shall be liable to deducted TDS @ 10% under 194J.

4.    Depreciation on assets – When we purchase the asset it would be categorized as Capital Asset and these assets is expected to generate revenue for the company for a longer period of time 180 days or more then there will be full depreciation on the assets. And depreciation will directly reduce the profits and will give tax benefits over the years.

5.    Rent Expenses- If the registered office of the company is on the name of any director or any other person then we can book the rent expenses and that reduce the profit and give tax benefits.

6.    Entertainment expenses and meeting expenses-   

                                                   i.     Meeting with client over lunch, dinner or to sporting event such expenses are deductible.

                                                 ii.     Entertainment is the most exciting expenses of the business, one must celebrate their success of the business with their employees when it is a deductible expenses.

7.    Salary expenditure of a family member -  When there are family member involved in the business, you can book their salary as expenses and that’s the way you will bring your profit  at your home again.