Maximizing Tax Efficiency: Tips and Strategies for Regular Taxpayers

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Published Date:  21-12-2023   Author:   samradni-p
maximizing tax efficiency tips and strategies for regular taxpayers

Tax efficiency mainly refers to the strategies that a particular individual gets to use so as to save on his income and prevent a huge sum that will otherwise get taken aside for the purpose of tax payment. However, the strategies that one gets to use here are completely legal as they pose no penalty or any kind of risk on the individual following them.

In fact, this is one of the best ways for individuals and businesses to save their income and make the most of their tax benefits. That said, this article is going to be about some useful strategies that such businesses and individuals can resort to so as to make the most of their tax benefits. .

Here are some fair and honest ways to make the most of your tax benefits.

Optimizing input tax credit utilization for regular taxpayers

The input tax credit is nothing but the GST that a registered person gets to pay when he makes a purchase of goods and services for his business. The input tax credit helps an individual offset the liability that comes from the supply of these goods and services.

The most effective way that one can do this is to ensure that claims for all the credits are made as soon as possible to avoid problems that often arise as a result of late claims. In the case of a refund or excess input tax credit, it is very important that these claims be made within the stipulated period.

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As a business, it is essential to monitor the balances on input tax credits, and this must be done on a constant basis. This way, businesses and individuals can forfeit excessive credits that go beyond the maximum limit.

Keeping records of all transactions updated and accurately maintained, helps an individual to ensure a smooth operation of all input tax credit utilisations.

It would be helpful to know that the CGST Act has introduced two new subsections, which are as follows:

Section 49A

This section requires proper maintenance of input tax credits (be it about central, state, or union territory) for the application and payment of integrated taxes.

Section 49B

The input tax credits mentioned above can be used for the payment of any tax, and under any order or method that is prescribed by the management.In addition to that, there is the regulation 88A that one needs to take care of, which is as follows:

Before using an input tax credit against integrated tax, one must make sure that all consolidated taxes are paid in full.

Identifying and implementing tax-saving strategies for regular taxpayers

One of the best ways to prevent unnecessary deductions from income due to taxes is by proper tax planning. That said, the following are some strategies to help you with effective tax planning.

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Buy a home loan

This can, in fact, present an individual with the required benefits that often come under Section 80 C to minimise the monetary liability that comes with lower tax burdens. In addition to that, Section 24 B exempts an individual from paying taxes on the interest that comes with a home loan.

Renting a home also spares one from the interest component that comes as a part of annual income tax computations. The same goes for the purchase of one’s property in order to build a home, provided the home is built within five years.

Buy a health insurance policy

Only by doing this can a citizen get to avail all the right benefits that often occur as a part of tax deductions that come under section 80 D.  However, the amount deducted can vary based on one’s age and the sum set aside for insurance.

Buy a life insurance policy

Here, too, one can greatly benefit from section 80 C, which does a good job of exempting you from the payment of a certain amount, and section 10 D, which allows for a certain sum on the occasion of an early death or maturity.

Invest in government schemes.

Government-mandated schemes are those that can often reward one’s investments with some really high returns. This happens mainly as these often come as a part of section 80 bC, which can go up to an amount of Rs 1.5 lakhs. In addition to all of the above, section 80 C also comes with a number of options to give an individual a chance to invest in areas that help him reduce his tax payments.

This can even include things like medical insurance, home loans, or even charity donations, all of which are considered under section 80 C.

However,  tax-saving investments must be planned at the beginning of the financial year to get the best out of this.

However, waiting till the last quarter can often lead to some hurried decisions, which can lead to major blunders at the end of the year.

Starting early helps develop some long-term goals in the form of additional perks, which can provide an individual ample time to check all tax expenses and make informed decisions to avoid risks that could arise by the end of the financial year.

Planning and structuring business operations for tax efficiency

Tax planning is as important as financial planning. This is why it must be done efficiently to enjoy the optimum benefits of tax exemptions at the end of the financial year.

This involves making careful decisions in one’s business and other financials. This way, one can greatly avoid the payment of unnecessary taxes in a legal and legitimate way.

This way, returns can be directed to smart and productive investments that contribute to the country’s national development. While the options are many, they mainly fall under three types, which we shall now see.

Short and long-range tax planning

Short-range tax planning is the kind of tax planning that is done every year. This is with a specific aim and objective that one sees at the end of the fiscal year. Long-range tax planning, on the other hand, happens at the beginning of the year. This is when the assessee sees to certain practices, though payments do not happen immediately.

Permissive tax planning

These are the kinds of taxes carried out under the provision of the country’s taxation laws.

Purposive tax planning

Here, too, taxes are planned with a particular purpose and objective, which can include anything from income assets to the diversification of one’s business. Here, the taxes are based on the individual’s residential status and various assets.

These are some ways in which an individual can reduce the liability that comes with paying taxes to have fewer burdens and obstacles coming in the way of his financial dreams and goals.

Apart from reducing tax liabilities, they also contribute to productive investments, leading to the growth of the economy and giving the individual the satisfaction of being a good citizen of the country.

Utilising tax software and tools for regular taxpayers

Tax software comes in different kinds, so here is a brief overview of some of the most popular ones you can read and understand.

GST Tax Filing Software

Chartered accountants often use GST tax filing software to help fulfil their operational requirements and enhance the productivity of their work. This way, they can handle customer records with greater care and consistency and according to the stipulated deadlines.

In other words, it makes their chores simpler, which is very important because GST gets revised multiple times. The software helps reduce liabilities that come with VAT and other kinds of service taxes.

XBRL filing software

This software mainly helps handle the internal and external reports within a company by way of preparation, analysis, and communication of all information in a business.

This way, fragile documents like load reports and credit risk assessments are better handled in the end. Firms can manage their costs and other financial information with utmost productivity.

The software is reliable and can even be customised according to the task that is at hand, be it recording, saving, or transforming information within the company.

ROC Filing Software

This method can be very useful when taxes need to be filed on a manual basis.It is for this reason that the technology is not very popular today.

Income tax filing software

This software helps save records of client’s information more efficiently and allows an individual to access them at any time conveniently.

This way, data can be maintained more simply, consuming less time. It is for this reason that the software is popular among chartered accountants. Computing taxes now becomes easy with fewer chances of human errors, which are otherwise common.

TDS return filing software

This is a kind of software used in tax filing, mainly in the task of furnishing returns. The software helps reduce manual work to a great extent and is highly compatible with a user’s needs. It helps access records with ease and manage the entire process more efficiently.

Work process tax filing software

Last of all, you have the work process tax filing software, which is nothing but the kind of software you use to complete raw tax data, fill sheets, and check tax returns.

The software makes it easier to input data from different forms and calculate taxes accurately and appropriately.

Seeking professional advice to maximise tax benefits

While there are many strategies that one can resort to in order to maximise tax benefits, seeking the right professional help is of utmost importance.

This way, one can get all the tax-saving tips that could help him as an individual or an entrepreneur looking to enhance his tax-saving benefits.

One of the best things you can do here is hire a family member or relative.

Tax accountants are another set of people experienced in dealing with taxes, the consequences of non-compliance, and the penalty that one gets to pay for it. They provide valuable information on how to set long and short-term goals, in addition to the strategies on minimizing tax and making the most of tax benefits.

This way, one can learn better how to handle taxes and plan yearly finances.

Achieving tax compliance while minimising tax liabilities

There is a degree to which every citizen needs to comply when it comes to paying taxes to the country.

This is because every individual, business, or other such entity owes some amount of tax to the government, failing which he will be faced with a penalty.

While the Income Tax Act is very particular about this, this can be minimised with the right arrangements of one’s finances and practices that must be followed efficiently.

One of the most important things that one should do here is a good self-assessment. Do this constantly and regularly, and you will not be facing blunders about your tax liabilities.

Along with that, it is very important to have a good understanding of tax credits and deductions while reducing risks at the same time. This way, you can also make the most out of your investment losses in the form of gains from your finances.


Taxes are inevitable. Yet, they can be carried out in a way that they do not become a burden and an unwanted liability. This is provided you are smart in learning how to handle it all by gathering all the information that you need.

All this is possible if an individual is open to learning as tax rates can keep increasing, policies and regulations can change, and benefits too can be arising by the day.

Lesser liability, more efficiency, and greater financial goals are some of the things that one gets to enjoy as a result of this.


  • What is tax efficiency?

This is nothing but a method of making sure that the money that is going from your income to tax is minimum while at the same time fulfilling the standards set by the law of the country.

  • What is the purpose of tax efficiency?

Take, for instance, you buy materials for your business at the cost of Rs 10,000, of which a total of Rs 1800 goes for the GST. You can now use this amount to deduct the GST that you would otherwise have to pay for the finished goods.So, let’s assume that your finished goods are worth an amount of Rs 15,000 demanding a GST of 2700, you can use your above GST to bring down the amount to Rs 900.

  • What is tax optimisation?

This is a process where a business follows an efficient strategy to reduce obligations on the taxes they have to pay in a way that falls within the legal framework and fulfils governmental regulations.

  • How can we optimise our tax efficiency?

The secret lies in placing investments in the right account so that, in the end, there are fewer returns to taxes for better management of your taxable accounts.

  • What is the most important factor for effective tax planning?

One of the most important factors is a good evaluation of your total annual income, after which you can carefully assess what tax-saving instruments are best for you to invest in.

  • Which is the biggest source of taxes for an individual?

Personal income is where an individual contributes 35 per cent of his tax, which makes it the biggest contributor to his taxes.

  • What is the main factor that affects the taxation of an individual?

A person is mainly taxed on his ability to work, save and invest. These are the factors that determine the taxes that he has been imposed for the income he earns.

  • Does every country follow the system of income tax?

No, countries like Bermuda, Monaco, UAE, and the Bahamas do not impose any personal income tax on their citizens.

  • Which is the country that follows the most efficient system of tax?

The survey shows that Estonia scores the highest in the positive features of its tax regulations.

  • Which is the country that demands the least amount of taxes from its citizens?

The answer is Kuwait, as the country demands no income tax, which is why it is a favourite of ex-pats who like to make a living in this tax-free country.

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Samradni P

Meet Samradni Pradhan, a seasoned content writer with a passion for weaving narratives across diverse industries. Armed with a full-time MBA in Marketing, Samradni brings a wealth of experience garnered from elite advertising agencies such as Ogilvy and Mather and Lowe Lintas. With a dynamic career spanning 6 years, she has honed her craft by delving into various categories and niches, including technology, healthcare, fashion, lifestyle, and her speciality, BFSI.

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