Difference between Tax Planning Tax Management

 Tax planning It is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible. Tax planning is an essential part of an individual investor's financial plan. Reduction of tax liability and maximizing the ability to contribute to retirement plans are crucial for success

Tax Management 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.

Difference between Tax Planning & Tax Management

(i) The Objective of Tax Planning is to minimize the tax liability

The objective of Tax Management is to comply with the provisions of Income Tax Law and its allied rules.

(ii) Tax Planning also includes Tax Management

Tax Management deals with filing of Return in time, getting the accounts audited, deducting tax at source etc.

(iii) Tax Planning relates to future.

Tax Management relates to Past ,. Present, Future.

Past – Assessment Proceedings, Appeals, Revisions etc.

Present – Filing of Return, payment of advance tax etc.

Future – To take corrective action

(iv) Tax Planning helps in minimizing Tax Liability in Short-Term and in Long Term.

Tax Management helps in avoiding payment of interest, penalty, prosecution etc.

(v) Tax Planning is optional.

Tax Management is essential for every assessee