Minimize your taxes, maximize your wealth | Rare Techy
Abdul Karim is not worried about the tax liability of Tk 51,500 because he has invested enough money in the specified area and he knows that the investment allowance is a legitimate way to get tax deductions. And this tax credit will help him reduce taxes significantly.
He pays a premium for his children’s education. He knows that life insurance premiums paid by taxpayers for dependent children or spouses (if not taxpayers) will be eligible for tax deductions. But in the case of DPS (Deposit Pension Scheme), only in the name of the Taxpayer alone with a maximum annual limit of Tk 60,000.
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He wrote Tk 120,000 as RPF (Recognised Provident Fund) because his company also contributed Tk 60,000 to the Fund with the same contribution. Both contributions are considered as investment allowances.
He had one number to calculate the tax deduction but he had to find two more numbers. One of them is, 20 percent of the taxable income of Tk 810,000 is Tk 162,000. He got taxable income from the second step. And one more Tk 1 crore. Of these three numbers, the lower amount becomes the investment allowance.
Even though he has invested Tk 200,000, he is eligible for a 15 percent tax deduction on Tk 162,000. Karim always tries to invest more than the limit because he does not want to take the risk of losing the full benefit of the tax rebate.
However, the amount of tax deduction is Tk 24,300 (Tk 162,000X15 per cent). He paid only Tk 27,200 instead of Tk 51,500. He has succeeded in reducing his tax liability.
On the other hand, he will get a large amount after the maturity of this investment, which will help him to acquire assets like plots or apartments. Or, he can use the money for his children’s higher education. So, investing will also help him maximize his wealth.
Karim has obtained two figures in this step which will be written down in the second part of the first page of the return tax form. He opened the page and wrote a tax deduction of Tk 24,300 on the serial number. 07 and tax payable Tk 27,200 in serial no. 08.
The company already deducts Tk 2,000 in taxes every month, or Tk 24,000 annually. It should also be included from the amount of tax payable. He wrote Tk 24,000 in serial no. 9(a). So, the difference is only Tk 3,200, which has to be paid with the tax return. This number must be written in series. 10.
In the last line in series 11, he wrote the exempted amount of Tk 390,000, the amount he excluded from his total income while calculating the taxable income in the second step.
In this line, there is a verification that Abdul Karim has to do by mentioning his name, father’s name and taxpayer identification number. He must also sign the document specifying the signature date.
Finally, at the bottom of this page, he mentions the enclosures he will attach with tax forms such as the two pages he made while working on the second and third steps, salary certificate, tax challan, insurance premium receipt, and DPS statement. .
So, the first page of the tax return form is complete. In the fourth step, he will prepare a statement of assets and liabilities from which he will know how wealthy he is.
The author is the lead consultant of Taxpert, an online tax training center.