"How Company Directors Can Save Money By Proper Tax Planning"

 

A director of a limited company is able to plan his tax affairs like any other individual so far as his income from dividends, house property, capital gains, etc. is concerned. In respect of income from salary also a director is able to plan his tax affairs in the same manner as any other ordinary employee.

The only difficulty in the case of a director in comparison with any other ordinary employee is that the value of any benefit or amenity granted to an ordinary employee is taxable in his hands when the monetary emoluments of the employee concerned exceed 50,000 per annum.

In the case of a director, however, the said monetary limit does not apply for the purpose of inclusion of the value of the amenity or benefit provided to a director free of charge. It so happens in some cases that a director of a company is also to look after the management of another company or a firm or an undertaking of the same management. In such a case, the director can so plan his tax affairs and the total emoluments that he enjoys from the tax-free perquisites or amenities from the other concern in which he is not a director, so that he pays the least tax.

In this manner the director, by proper tax planning, should be able to minimise his tax incidence in respect of the various amenities or benefits and perquisites granted by the employer or employers, as the case may be.
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