The introduction of GST has made the Indian taxation system a bit smoother than the past but there are still many complications to deal with. When it comes to small business owners, managing everything at once might seem overwhelming at first. Saving money is very crucial for small businesses out there because a blooming business needs the continuous cash flow all the time and every penny counts for it. Here are some generally unknown tips for the small business owners in India to help save a lot of money in the taxes-
Show up your housing loan:
If you have it, flaunt it. Well, this is extremely true in case of home loans that are still running. The interest of home loan might be shown to ask for deduction in the taxable amount. However, this is limited to a maximum amount of 1.5 Lakh only. Showing this amount in the tax file might help reduce the income made from the house property and thus lower the taxes.
It is wise to pay the municipality taxes through electronic medium and save the receipts for filing the tax. The facility of electronic payment is that the linked bank account holds the proof in case of any loss of receipts. These amounts paid to the municipality can be shown as deductions under the income made from the house.
Say hello to smart accounting:
In India it is quite natural to have a lots of work divided among enterprises that are labor intensive by nature. In these cases the wages might be paid in cash. In fact, almost forty percent of the expenses made by a small business company in India go directly or indirectly in paying wages. It might be pretty difficult to keep track of these expenses made and that might affect the taxable amount in total. The loss of track records of these
expenses made might lead towards an unusual increase in the profit margins. That is why; it is necessary to keep a proper track of these records. Smart accounting might help in this and also reduce the costs of hiring a professional. Ultimately saving every penny is all that counts.
According to the Income Tax Act in India, there are provisions of claiming an additional 20% depreciation for small business owners if they install any new machinery. This is although, applicable only for the first year of any new machine. However, this might help save a lot of money on the taxes by claiming for the extra 20% depreciation.
Know all about TDS:
Keeping track of the money paid to freelancers or business agents is necessary. In these cases, usually, the TDS gets deducted at the source itself. Any fault with that process might lead towards paying a lot more on the behalf of the business owners themselves. This happens due to the fact that without TDS the total sum becomes inadmissible for any claim on tax rebates.
These are some easy yet effective ways to save taxes for small business owners.