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Wealth Planning · Step 4 of 5

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4Business Owner›
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Wealth & Treasury Management

Business Owner Financial Planning

Business Owner Wealth

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Overview

Business owner financial planning is wealth planning that starts from the business, not from a product brochure. The owner's personal wealth is built inside the business — profits, the sale of the business one day, the property bought through it, the family's income drawn from it — so the plan has to integrate the company's tax position, the owner's personal income, and the family's goals. The Income Tax Act 1961 provides the building blocks: the deductions of Section 80C to 80U, the choice between the old and new regimes under Section 115BAC, the presumptive schemes of Sections 44AD and 44ADA for small businesses and professionals, and the capital gains exemptions of Sections 54, 54F and 54EC for the proceeds of assets sold.

What makes owner planning different from salaried planning is that the owner controls the levers. Salary versus dividend versus loan from the company, drawing rent from a business property, deferring or accelerating profits between years, structuring the eventual sale of the business — each choice has a tax and a risk consequence, and the choices interact. The plan is built on the company's projected profits, the owner's drawings, the family's cash needs and the exit horizon.

Without a plan, the owner pays the default prices: salary taxed at slab rates where a split with dividends and structured drawings would have cost less; profits reinvested in the business earning nothing for the family; capital gains on a business sale landed in a year that maximises the tax; and no succession structure, so the business passes at the wrong time and the wrong tax cost.

This service is for business owners, partners and promoters — from small proprietorships to companies with real exit ambitions. We model the owner's income and the business's position across regimes, plan drawings and structure, use the Section 80C-80U deductions properly, plan business-sale capital gains under Sections 54/54F/54EC, and build the family's investment and succession picture around the business.

How It Works

  1. 1

    Owner & Business Review

    We map your business position, drawings, family cash needs and goals.

    You do this3-5 days
  2. 2

    Tax Position Modelling

    We model your income across the old and new regimes under Section 115BAC and the deductions of Sections 80C-80U.

    Harun Raaj & Associates does this1 week
  3. 3

    Drawings & Structure Plan

    We plan salary, dividend and loan positions and the structure of business assets.

    Harun Raaj & Associates does this3-5 days
  4. 4

    Capital Gains & Exit Planning

    We plan business-sale and asset-sale gains using Sections 54, 54F and 54EC of the Income Tax Act.

    Harun Raaj & Associates does this1 week
  5. 5

    Family Wealth & Review

    We build the family investment and succession picture and review the plan annually.

    Harun Raaj & Associates does thisOngoing

Frequently Asked Questions

Should I draw salary from my company or take dividends, and what is the tax difference?
Salary paid to an owner-director is deductible for the company under Section 37(1) of ITA 1961 but taxed as income under the head Salaries in the owner's hands under Section 17. Dividends are not deductible for the company and are taxable in the shareholder's hands at applicable slab rates under Section 56(2)(i) since the DDT abolition in Finance Act 2020. The optimal mix depends on the company's effective tax rate (22% under Section 115BAA vs. the owner's marginal slab), provident fund obligations under the EPF Act 1952, and working capital needs — we model both scenarios for AY 2026-27 (ITA 1961) and TY 2026-27 (ITA 2025) before recommending.
How do I structure a family business succession without triggering capital gains?
Gifts of capital assets to specified relatives — spouse, children, siblings — are exempt from tax in the recipient's hands under the proviso to Section 56(2)(x) of ITA 1961, so no income tax arises on transfer. However, cost for the recipient is the original cost of the transferor under Section 49(1), so embedded capital gains follow the asset on eventual sale. For succession via a Will, no transfer occurs during the testator's lifetime and the heir takes over cost basis under Section 49(1)(ii). Partition of a Hindu Undivided Family is governed by Section 171 — the partition must be total, verified, and intimated to the Assessing Officer to be recognised.
What presumptive income scheme is available and when does mandatory audit apply?
Proprietors and partnerships in eligible businesses with turnover up to Rs 3 crore (where digital receipts exceed 95%) can declare 6% as deemed profit under Section 44AD of ITA 1961 (Section 58 ITA 2025) without maintaining books. Professionals in notified fields with gross receipts up to Rs 75 lakh can use Section 44ADA (Section 59 ITA 2025) at 50% deemed profit. If turnover exceeds the threshold or the assessee opts out, a tax audit under Section 44AB (Section 63 ITA 2025) is mandatory, with the audit report in Form 3CD due by September 30. Opting out of Section 44AD locks the assessee out of the scheme for five subsequent years.
How do I plan for retirement when there is no employer EPF contribution?
A self-employed proprietor can contribute to the National Pension System under Section 80CCD(1) up to 20% of gross income — a higher cap than the 10% available to employees — with an additional Rs 50,000 deduction under Section 80CCD(1B), both under ITA 1961 applicable for AY 2026-27. For TY 2026-27 under ITA 2025, the default regime under Section 202 disallows Chapter VI-A deductions; owners with significant NPS contributions must evaluate whether the old regime produces a better net outcome. PPF contributions under the PPF Scheme 1968 qualify under Section 80C with a Rs 1.5 lakh annual cap and a 15-year lock-in.
What advance tax obligations apply to a business owner and what is the penalty for shortfall?
Business owners with estimated tax liability exceeding Rs 10,000 in a financial year must pay advance tax in four instalments — 15%, 45%, 75%, and 100% of estimated liability by June 15, September 15, December 15, and March 15 respectively under Section 208 of ITA 1961. Under ITA 2025 the same obligation continues under Section 447. A shortfall in any instalment attracts interest at 1% per month under Section 234C of ITA 1961 (Section 448 ITA 2025); non-payment of advance tax attracts interest under Section 234B (Section 447 ITA 2025). Owners under Section 44AD who opted for presumptive taxation must pay the entire advance tax in one instalment by March 15.

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