INTRODUCTION:

Tax is the compulsory that every individual needs to pay to the government. The refusal of payment of tax is considered as a punishable offense. There are mainly two types of taxes direct tax and indirect tax. Direct taxes are those taxes that are directly paid to the government by theeach individual. It is a tax applied on individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc. and indirect tax are those that are applied on the manufacture or sale of goods and services. These are initially paid to the Government by an intermediary, who then adds the amount of the tax paid to the value of the goods/services and passes on the total amount to the end user. Examples of these are sales tax, service tax, excise duty etc. It is here that tax planning has assumed far-reaching importance in the confounding complexities of the taxation laws. The planning has proved a savior of the economic life of the tax payer who can reduce the incidence of tax to the minimum if he is able to plan his tax affairs diligently and intelligently.

Tax planning may be defined as an arrangement of one’s financial affairs in such a way that without violating in any way the legal provisions, full advantage is taken of all exemptions, deductions, concessions, rebates, allowances and other reliefs or benefits permitted under the Act so that the burden of taxation, as far as possible, is the least. Tax planning is neither tax evasion nor tax avoidance. It is the systematic planning of one’s financial affairs in such a way as to attract minimum liability to tax for the subsequent period by availing of various incentives, concessions, allowances, rebates and reliefs provided for, in the context of existing tax laws.

REVIEW OF LITERATURE:

It is very much important for individuals to learn about tax planning now a days as there are higher tax rate and the amount deducted will also be also higher based on the income (Dickerson, 1957) taxes cannot be neglected by individuals because a well tax plan for income helps in saving huge amount of tax deducted on source. it is very much essential for an organization to educate individuals on tax planning on how and where they can save tax and to pay tax to the government (H.Hoffman, 1961).The top level management officers and business-unit managers using after-tax accounting-based performance measures leads to lower effective tax rates, the empirical surrogate used for tax-planning effectiveness (Carman, 1969). Utilizing proprietary compensation data obtained in a survey of corporate executives, the relation between effective tax rates and after-tax performance measures is modeled and estimated using a two-step approach that corrects for the endogeneity bias associated with firms' decisions to compensate managers on a pre- versus after-tax basis (Estates, 1972).

The results are consistent with the hypothesis that compensating business-unit managers, but not chief executive officers, on an after-tax basis leads to lower effective tax rates (Philips, 2003). Tax planning is an art of giving. The satisfaction that springs from giving can take on added luster when coupled with the always to be desired saving of tax dollars (Bannon, 1985). A person doesn't have to be rich to enjoy these benefits. For example, estate taxes can be cut by giving away property during one's lifetime. And, if income-producing property is given to a low-bracket do nee, the donor also reduces his income taxes (Robbinson and Weaver, 2010).

Here are a few suggestions on how to increase giving, while reducing taxes. By measuring the tax benefits that would have resulted from particular strategies that were not undertaken, a lower-bound estimate of the perceived nontax cost of implementing these strategies is obtained (Poll, 1996). It is important that tax-saving opportunities be recognized when they arise. While it is sometimes possible to take advantage of opportunities which were overlooked on an earlier date, the usual result of tardy recognition is a lost opportunity (McCaffrey and G. Krischner, 1994).

In most instances, the original action is deemed final for the purpose of determining the tax obligation. Taxes cannot be neglected because it is net income after taxes that is important. Where half of the income is paid out in taxes, it is necessary to earn two dollars in order to retain one. It follows that a saving of one dollar in income tax is the equivalent of a two dollar saving in any other expense or the earning of an additional two dollars of income (Huddleston and Source, 2006).

In view of the importance of tax planning in the management of business, it seems desirable that instruction in the subject be made available to all students of business administration. The extent and timing of this instruction would depend on several things (Mitchell, 1979). Among these is the matter of prerequisite courses. A knowledge of both accounting fundamentals and the tax provisions which make planning desirable are needed in the study of tax planning. This fact might delay part of the tax planning instruction until quite late in the student's program, in some cases until the graduate years.

RESEARCH GAP:

The study has not being conducted on the areas of Bangalore so it has being considered as a research gap in analyzing the tax planning measures adopted by the salaried class in Bangalore city.

STATEMENT OF PROBLEM:

The salaried employees constitute a sizable class of taxpayers who contribute to thepublic exchequer about 12 percent of the total revenue collection by way of income tax. Their income is assessed under the head “Salaries”. Tax planning has assumed special importance for the salaried class of tax payers in view of the mounting pressures of inflation, price hike and their strict obligations to tax compliance. It is therefore, essential for this class of tax payers to know their tax obligations in the right perspective and the measures of tax planning available to them so that they can make the best use of their earnings by reducing the incidence of tax. Thorough and up-to-date knowledge of the tax laws is necessary to avail the benefits provided under the provisions of the Act and thereby ensuring that the take home pay is kept at the maximum possible monetary level.

However, efforts from the part of the assesses to plan his savings and investments so as to minimize the tax incidence is not up to the mark. There are numerous reasons for this ranging from lack of awareness of taxation laws to complexities in the compliance formalities. The administrative machinery for collection and enforcement of taxes is often complex in terms of maintenance and operations. The study is based on examine tax planning and investment measures adopted by the salaried class.

OBJECTIVE:

1. To ascertain the level of awareness of the salaried class on various tax planning measures available on professional tax under the income tax act.

2. To ascertain the relationship between the financial adviser and the employee‘s formulation of tax planning.

HYPOTHESIS:

On the basis of the first objective the following hypothesis is derived:

H_0: There is no awareness among the salaried class on various taxes planning such as professional tax available under the income tax act.

H₁: There is awareness among the salaried class on the tax planning such as professional tax available under the income tax act.

RESEARCH METHODOLOGY:

The study was done with the help of both primary and secondary data. Primary data were collected through questionnaire. Secondary data were collected from various journals, books, magazines and online resources. The study was conducted using sample survey covering 40 sample respondents. The population of the study includes salaried class. For the selection of samples convenient sampling has been used. The collected data were analyzed using appropriate tools like SPSS, MS Excel etc.

Variables:

Independent variable: Tax planning measures, awareness about the deductions. Dependent variable: Professional tax, insurance premium, contribution to provident fund.

DATA ANALYSIS:

Correlation analysis

		Age:	Sex:	Status of the Employee:	Annual Income	income in a year is saved ?	formulate your tax plan
Age:	Pearson Correlation	1	.453^**	.502^**	.433^**	.281	-.205
	Sig. (2-tailed)		.003	.001	.005	.079	.205
	N	40	40	40	40	40	40
Sex:	Pearson Correlation	.453^**	1	.227	.226	.048	-.019
	Sig. (2-tailed)	.003		.159	.161	.768	.909
	N	40	40	40	40	40	40
Status of the Employee:	Pearson Correlation	.502^**	.227	1	.487^**	.389^*	-.401^*
	Sig. (2-tailed)	.001	.159		.001	.013	.010
	N	40	40	40	40	40	40
Annual Income	Pearson Correlation	.433^**	.226	.487^**	1	.365^*	-.149
	Sig. (2-tailed)	.005	.161	.001		.021	.359
	N	40	40	40	40	40	40
income in a year is saved ?	Pearson Correlation	.281	.048	.389^*	.365^*	1	-.184
	Sig. (2-tailed)	.079	.768	.013	.021		.256
	N	40	40	40	40	40	40
formulate your tax plan	Pearson Correlation	-.205	-.019	-.401^*	-.149	-.184	1
	Sig. (2-tailed)	.205	.909	.010	.359	.256
	N	40	40	40	40	40	40
Financial Adviser	Pearson Correlation	-.330^*	-.104	-.268	-.042	-.030	.654^**
	Sig. (2-tailed)	.037	.524	.094	.799	.855	.000
	N	40	40	40	40	40	40
[ Professional Tax]	Pearson Correlation	-.112	-.051	-.247	-.076	-.137	.540^**
	Sig. (2-tailed)	.492	.755	.125	.641	.399	.000
	N	40	40	40	40	40	40
[Interest on Housing Loan]	Pearson Correlation	-.368^*	-.138	-.246	-.390^*	-.332^*	.422^**
	Sig. (2-tailed)	.020	.397	.127	.013	.036	.007
	N	40	40	40	40	40	40
[Insurance Premium]	Pearson Correlation	-.069	-.062	.072	.136	-.215	-.004
	Sig. (2-tailed)	.670	.704	.661	.404	.184	.979
	N	40	40	40	40	40	40
[ Contribution To PF]	Pearson Correlation	-.167	-.152	-.028	-.154	-.089	.318^*
	Sig. (2-tailed)	.303	.349	.863	.342	.584	.045
	N	40	40	40	40	40	40
[Investment in Post office Savings]	Pearson Correlation	-.008	.261	-.013	.119	-.075	.307
	Sig. (2-tailed)	.962	.104	.935	.464	.645	.054
	N	40	40	40	40	40	40
[Subscription to Mutual Fund]	Pearson Correlation	-.173	.021	-.319^*	-.095	-.074	.017
	Sig. (2-tailed)	.287	.899	.045	.561	.650	.918
	N	40	40	40	40	40	40
Contribution to Pension Fund]	Pearson Correlation	-.158	.046	.028	-.050	-.280	.203
	Sig. (2-tailed)	.331	.778	.866	.758	.080	.209
	N	40	40	40	40	40	40
[Donation to charitable Organizations]	Pearson Correlation	-.257	-.142	-.166	-.015	-.211	.381^*
	Sig. (2-tailed)	.109	.383	.307	.929	.192	.015
	N	40	40	40	40	40	40

Financial Adviser	[ Professional Tax]	[Interest on Housing Loan]	[Insurance Premium]	[ Contribution To PF]	[Investment in Post office Savings]	[Subscription to Mutual Fund]	Contribution to Pension Fund]	[Donation to charitable Organizations]
-.330^*	-.112	-.368^*	-.069	-.167	-.008	-.173	-.158	-.257
.037	.492	.020	.670	.303	.962	.287	.331	.109
40	40	40	40	40	40	40	40	40
-.104	-.051	-.138	-.062	-.152	.261	.021	.046	-.142
.524	.755	.397	.704	.349	.104	.899	.778	.383
40	40	40	40	40	40	40	40	40
-.268	-.247	-.246	.072	-.028	-.013	-.319^*	.028	-.166
.094	.125	.127	.661	.863	.935	.045	.866	.307
40	40	40	40	40	40	40	40	40
-.042	-.076	-.390^*	.136	-.154	.119	-.095	-.050	-.015
.799	.641	.013	.404	.342	.464	.561	.758	.929
40	40	40	40	40	40	40	40	40
-.030	-.137	-.332^*	-.215	-.089	-.075	-.074	-.280	-.211
.855	.399	.036	.184	.584	.645	.650	.080	.192
40	40	40	40	40	40	40	40	40
.654^**	.540^**	.422^**	-.004	.318^*	.307	.017	.203	.381^*
.000	.000	.007	.979	.045	.054	.918	.209	.015
40	40	40	40	40	40	40	40	40
1	.534^**	.240	-.003	.104	.176	.030	.073	.432^**
	.000	.135	.983	.524	.276	.855	.653	.005
40	40	40	40	40	40	40	40	40
.534^**	1	.392^*	.233	.313^*	.386^*	.302	.265	.624^**
.000		.012	.148	.049	.014	.058	.098	.000
40	40	40	40	40	40	40	40	40
.240	.392^*	1	.328^*	.475^**	.352^*	.380^*	.467^**	.433^**
.135	.012		.039	.002	.026	.015	.002	.005
40	40	40	40	40	40	40	40	40
-.003	.233	.328^*	1	.284	.551^**	.358^*	.549^**	.336^*
.983	.148	.039		.076	.000	.024	.000	.034
40	40	40	40	40	40	40	40	40
.104	.313^*	.475^**	.284	1	.377^*	.465^**	.583^**	.473^**
.524	.049	.002	.076		.016	.002	.000	.002
40	40	40	40	40	40	40	40	40
.176	.386^*	.352^*	.551^**	.377^*	1	.163	.660^**	.378^*
.276	.014	.026	.000	.016		.314	.000	.016
40	40	40	40	40	40	40	40	40
.030	.302	.380^*	.358^*	.465^**	.163	1	.234	.411^**
.855	.058	.015	.024	.002	.314		.146	.008
40	40	40	40	40	40	40	40	40
.073	.265	.467^**	.549^**	.583^**	.660^**	.234	1	.333^*
.653	.098	.002	.000	.000	.000	.146		.036
40	40	40	40	40	40	40	40	40
.432^**	.624^**	.433^**	.336^*	.473^**	.378^*	.411^**	.333^*	1
.005	.000	.005	.034	.002	.016	.008	.036
40	40	40	40	40	40	40	40	40

REFERENCES: