Tax management is an integral part of tax planning. It takes necessary precautions to comply with legal formalities to avail the tax exemption/ deduction, rebate or relief as are contemplated in a scheme of tax planning. For Ex: If the scheme of tax planning envisages a deduction in respect of export of certain articles or things under Section 10 BA, it will not be allowed unless the relevant conditions of Section 10 BA (2) are satisfied. Tax management plays a vital role in claiming allowances, deductions and tax exemptions by complying with the required conditions. Under tax management, an assessee is advised to take benefits envisaged in a scheme of tax planning. Thus, tax management seeks to achieve and retain tax benefits envisaged in a scheme of tax planning by following attendant conditions, procedures, and rules provided in the statute. Tax management also protects an assessee against penalty and prosecution by discharging tax obligations in time.
Thus, study of tax planning is incomplete without tax management. Tax planning without the study of tax management is like knowing the medicine without knowing how to administer it.
Objectives of Tax Management
- Tax planning with reasonable business purposes that is in line with tax laws and regulations.
- Business decisions and day-today business activities are in time with tax laws and regulations by considering the effects of tax factors.
- Accounting treatments for tax issues are in line with relevant accounting systems or standards, as well as relevant laws and regulations.
- Tax fillings and tax payments are in line with relevant tax laws and regulations, and
- Tax registration, accounting books management and tax records management, as well as tax information preparation and reporting and other tax related items are in line with tax laws and regulations.
Difference between Tax planning & Tax Management
Basis of Difference
|1. Scope||Tax planning is a wide term and includes tax management.||Tax management is narrower term and is the first step towards tax planning.|
|2. Aim||Tax planning emphasizes on minimization of tax burden.||It emphasizes on compliance of legal formalities for minimization of tax.|
|3. Need||Every person may not require tax planning.||It is essential for every person.|
|4. Procedure||Tax planning helps in decision making.||It helps in compliance the conditions for effective decision making.|
|5. Object||Tax planning helps to claim various benefits of tax.||It helps in compliance the conditions for claiming tax benefits.|
|6. Functions||Tax planning involves comparison of various alternatives before selecting the best one.||It involves maintenance of accounts in prescribed form, filing of return, payment of tax, etc.|
|7. Period||Tax planning looks at future benefits.||It related to past present and future.|