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What is a Tax Consultant and What Do They Do?

A tax consultant is a person who is hired by people and organisations to help them pay their taxes*. They have expertise in tax planning, tax compliance, and tax law. Tax consultants help in filing returns and minimise tax-related liabilities during the year. 

Filing tax* returns and understanding your tax liability can seem complicated. These processes require a deep understanding of the Indian taxation system and how taxes are calculated. So, there are tax consultants that can help you out in these processes.

If you are an individual or an organisation, you can hire tax consultants to help you pay your taxes.

Let us find out in detail about tax consultants, what they do, and the benefits they offer.

What is a Tax Consultant?

Tax consultants are experts in tax planning, tax laws, and tax compliance. Any organisation or individual can hire them for short-term or long-term optimisation of taxes. They help you in filing your tax returns and also help you minimise your tax liabilities during the year.

It does not cost a lot to hire an income tax consultant, and they will help you pay only the required amount of taxes and help you avoid any tax liabilities when the financial year ends.

Now that you know what is a tax consultant, read on to find out other details about tax consultants.

What Does a Tax Consultant Do?

Tax consultants are aware of all the regulations applicable as per the Income Tax Act that every organisation and individual has to abide by at the time of filing taxes. You can meet your consultant in person, or you can also talk on the phone regarding the filing of taxes.

Other than income tax e-filing, there are other services that a tax consultant offers. These include:
 

  • Tax documentation
  • Filing income tax returns for freelancers.
  • E-filing income tax
  • Evaluation of the financial and legal circumstances of clients to understand their tax liabilities.
  • Completion of forms like Form 21B, Form 16, etc., and submitting them on the official Income Tax website and also sending them to the Bangalore office of the department (if required).
  • Helping you invest in some of the top tax-saving schemes like health insurance, life insurance, child plans, PPF, and other schemes that the government has introduced.

Difference Between an Accountant and an Income Tax Consultant

Accountant: An accountant generally helps firms and individuals maintain accounting records of firms annually, as well as helps them file their income tax returns, analyse reports of business performance, and provide general advice on taxes and tax audits. They also provide advice to companies on the reduction of their tax liabilities. In simple terms, their role focuses on making strategic financial decisions for the firm.

Tax consultants: They have deep knowledge of income tax rules and regulations, and they can provide you with legal advice on taxes. Before you hire a tax consultant, check whether they own a tax advisory firm or work on tax-related issues. They should also own a certificate of their practice. They can provide you with help in planning your taxes during the year and not only when the financial year ends.
 

Therefore, accountants have an all-encompassing role, whereas tax consultants have a role that specialises in taxation. Some accountants can also offer you advice on taxes and help you plan your budgets, but hiring an income tax consultant might be better because they would have a deeper knowledge. 

Is a Tax Software Better than a Tax Consultant?

In recent years, tax software has gained popularity because it is easy to use and convenient. Because of this, many Indians have started filing tax returns by themselves. But, the software might not be a replacement for hiring a tax consultant as they can offer you advice, meet you, talk to you on the phone, and help you throughout the year.
 

With software, you will not be able to discuss anything, do financial planning, or even manage your portfolio of investments. Tax software might not offer you the satisfaction that your returns are filed accurately. On the other hand, tax consultants will help you make the right financial decisions and stay stress-free.

Advantages of Tax Consultants

  • Understand your tax deductions

    A tax consultant will help you understand all about your tax deductions in that year and advise you on the financial strategic investments that you can make to avoid financial obligations in the future.
    A tax consultant will help you make investments that will lower your tax obligations legitimately and also help you in optimising your financial portfolio. For instance, if you hire a tax consultant, they will help you save money by identifying the tax deductions applicable to you and save a lot of money in exchange for a small fee.
     

  • Saves time

    Most people end up waiting till the end of the financial year to file their income tax returns. This leads to them making hasty investment decisions. Filing income tax returns needs a lot of time and patience. It is essential to ensure that you have accurately filed your returns. A tax consultant will find your financial portfolio and check all your savings, income, and investments before you file your income tax returns. They will also provide you with suggestions to manage the portfolio effectively.
     

  • It is hassle-free and safe

    If you have a doubt regarding your finances, you can always consult a tax consultant. A consultant will help you maintain your records in a legitimate manner and safely without you having to run from one place to another.  
     

  • Tax advisory services

    Even if you do not hire a consultant full-time, you can still seek advice from them. You can ask them your doubts and perform all the leg work by yourself.

Conclusion

The tax department can send a notice to the taxpayer for a host of reasons. Now that you are aware of some of them, we recommend you take precautions during income tax e-filing and avoid making any mistakes.

Want to Keep More of Your Hard-Earned Money? Speak to out expert

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Are accountants and tax consultants different?

Yes, tax consultants and accountants are different. While an accountant helps individuals and firms make financial decisions, a tax consultant specialises in tax-related topics, provides solutions, and helps you file your returns.

Do I need to hire a tax consultant to file income tax returns?

This depends on your situation. If you need help in planning your taxes and require advice on investments to save taxes, you can hire a consultant. But it is not mandatory. You can file your tax returns by yourself as well.

What is the fee for hiring a tax consultant?

There is no particular answer to this question. Every tax consultant charges a different fee, depending on the work, expertise, knowledge, experience, etc. You have to ask the consultant about the fee according to the work that you want them to do. It is advisable to understand the fee structure before you start consulting them.

Is it safe to hire tax consultants?

Yes, it is safe to hire a tax consultant. In fact, they can help you keep your tax records safely and help you abide by the regulations mentioned in the Indian Income Tax Act.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.