Tax Planning Vs Tax Management
It’s critical that you understand the difference between the two!
What techniques your business is currently utilising? Is it Tax Planning techniques, Tax Management techniques or even both! Knowing the Comparable differences will have a major impact on your Business profitability.
Below are our view on Tax Planning vs Tax Management from the Accounting & Advisory Team at Robley Baynes Tax & Accounting Services.
Tax Planning Vs Tax Management
Tax Planning is all about planning of taxable income and planning of investments of the Tax Payer. As against, Tax Management deals with the proper maintenance of financial records, audit of accounts, timely filing of the return, payment of taxes and appearing before the appellate authority, whenever required. Some of the major comparisons includes:
| TAX PLANNING | TAX MANAGEMENT |
|---|---|
| The objective of tax planning is to reduce the tax liability to the minimum. | The objective of Tax Management is to comply with the provisions of law. |
| Tax planning is futuristic in its approach. | Tax Management relates to past (i.e. assessments proceedings, rectification, revisions, appeals etc.), present (filing of return of income on time based on updated records) and future (corrective action). |
| Tax planning is very wide in its coverage and includes tax management. | Tax Management has a limited scope, i.e., it deals with specific activities such as filing of returns of income on time, drafting appeals, deductions of tax at source on tome, updating records from time to time, etc. |
| The benefits arising from tax planning are substantial particularly in the long run. | As a result of effective tax Management, penalty, penal interest, prosecution, etc can be avoided. |
Conclusion
Tax planning is an honest and legal method of availing the full advantages of taxation laws. It is a way of effectively managing the income and taxes so that the tax liability arising on the assessee is minimum. As against, Tax Management is an art of handling the financial affairs, while complying with the tax provisions, so as to avoid the payment of interest and penalties.
At Robley Baynes we help you navigate through your Tax Planning & Tax Management policy and procedures to reduce your overall Tax Impact.
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