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Saving 585000 Mahaveer and Company's Tax Optimized Growth Journey with TaxBuddy

About the Case:

Explore Mahaveer & Co.'s tax-optimized journey with TaxBuddy, saving ₹5,85,000. The case involved strategic measures to reduce tax burden, preserve control, resolve conflicts, and avoid surcharges. TaxBuddy's recommendation to include new partners, distribute profits, and manage surcharges led to significant tax savings and increased benefits for the entire partnership.

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Issues faced By

Mahaveer and company

Strategizing to reduce the firm's tax burden while preserving control and ownership.

Minimizing Tax Liabilities while Preserving Control & Ownership:

  • The firm grapples with the challenge of minimizing tax liabilities while ensuring control and ownership preservation. In the upcoming Assessment Year 2023-24, the partnership faces a flat tax rate of 30%. Additional taxes like surcharge, health and education cess, and alternative minimum tax may apply under the provisions of the Income Tax Act, demanding strategic measures for effective tax alleviation.

Conflict Avoidance Strategies between Partners:

  • Conflict avoidance among partners emerges as a critical concern. Trust issues, divergent goals, unequal contributions, decision-making discrepancies, and personality clashes among external partners pose potential risks to the firm's harmony. Implementing conflict resolution strategies becomes imperative to foster a cooperative and productive partnership environment.

Mitigating Extra Tax Burden through Surcharge Management:

  • The imposition of surcharges introduces an extra layer of tax burden. A 12% surcharge is applied to the income-tax amount when the total income exceeds one crore rupees. Strategically managing the total income below this threshold becomes essential to avoid surcharges, thereby effectively reducing the overall tax burden on the firm.

Clarifying Partners' Confusion on Taxation Scheme:

  • The intricate nature of tax laws and their frequent changes contribute to partners' confusion regarding the scheme of taxation. Navigating these laws effectively becomes challenging, leading to ambiguity about the applicable scheme of taxation for the firm's operations. Addressing this confusion requires clarity and understanding in the firm's overall tax planning strategy.

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How TaxBuddy Helped