What to Expect from Your Tax Consultant and how to work with them

A tax consultant is an advisor who helps individuals and organisations to pay their taxes. As they are qualified professionals and experts in their field, they will help you with planning your taxes, ensure compliance and provide you insights into the various taxation laws.

Here are some benefits from hiring a tax consultant:

• A tax consultantwill help you decode and understand taxation laws that are sometimes hard to interpret. As a layperson, it may be difficult for you to read into the nuances of certain tax laws and the various sections of the Income Tax Act.
• You may need help in understanding the right investmentchoices to make. There are many options and a consultant can help you pick the right option for tax planning and maximum deductions under various sections such as 80C or 80D.
• You may have income from many sources and a consultant helps you protect these assets and also ensure that you pay taxes correctly. Any violation of tax laws attracts penalties and by hiring a professional, you are protected from these penalties.
• While accountants may file your income tax, consultants can offer financial advice apart from helping you file IT returns.

So, what can you actually expect once you have hired a tax consultant?

• A tax consultantcan offer help when it comes to tax-related documentation; the documents you may need to look at ahead of filing and also putting together your entire tax history for ready reference in the future.
• The higher you scale the ladder at your workplace, the more complicated your salary structure and taxation may become. Also, you may have other sources of income. It is no longer as straightforward as just looking at your Form 16 and filing taxes online. You may need help to optimise your savings and make use of all deductions and exemptions. You can expect your tax consultantto provide you with clarity.
• You would need your consultant to be accurate in filing so that you don’t have to grapple with defective IT returns.
• You can also expect the consultant to offer you advice on investmentoptions, specifically the new tax-saving schemes made available by the government and give you information about the latest announcements. For instance, the Budget may have announcements pertaining to IT slabs or deductions; in such a scenario, the tax consultant should help you with advice on what it may mean to your salary bracket.

Working with a tax consultant: Points to consider

• You would first need to find the right consultant. You can seek recommendations from colleagues or acquaintances; alternatively, you can also look online for suggestions. You can look up reputed online tax consultancies that offer online advice so you don’t have to meet a consultant face-to-face or visit their offices.
• You would also need to look at the qualifications of the tax consultant, apart from their experience, particularly if the consultant is an independent professional. If the consultant is working in a consultancy firm, you may need to look at the credentials of the firm apart from a background check of the consultant’s past experience. If he or she has done a tax consultancy course, is a CA/ICWA/MBA, apart from college degrees from reputed universities, you may feel more comfortable.
• There are several packages on offer, based on the services you require and you will be assigned a dedicated expert to handle your account. If you are meeting an independent consultant, it helps to get a quote from them on the services they offer beforehand so there is no confusion later on.

No matter which route you take, ie, online or offline, there are some points to consider while working with a tax consultant:

• You would need to be upfront about your financial goals, risk profile and expectations. You would need to provide authentic information about your income and any other extra sources of income you might have. This helps the tax consultant come up with investment options and tax planning.
• If you have just gone through a life event such as marriage or birth of a child, if you have recently received a raise or if you have a fresh liability, it helps to discuss these aspects with your consultant who will help you with better financial planning. A life event such as marriage significantly alters your financial goals and also taxation. Your tax consultantmay suggest an insurance plan or a new tax-saving scheme that helps you in such a scenario.
• If you have been made a job offer, for instance, you could seek the opinion of your consultant on the tax implications and salary structure. It helps you negotiate for a better break-up to optimise savings. This highlights the need to trust your consultant and discuss your full financial situation so as to have a solid tax plan.
• Good communication, apart from trust, is also important. It is vital that you seek greater clarity in case you have any doubts or confusion over a specific investment option or deduction. For instance, you may have read that the new tax regime comes into effect from April 1, 2021, but you may not be sure if you can stick to the old tax regime and which one of them serves your salary structure better. Your consultant may have decided on staying with the old regime but you are unsure why. It helps to seek clarity so that you and your consultant are on the same page when it comes to what’s best for you.
• Your consultant should function within the legal and ethical framework, so it is important that you choose a consultant with the right credentials.

In a nutshell

A tax consultant offers financial advice, tax planning and helps you invest in the right instruments so you can optimise your savings and cut down tax liability. Apart from helping you file your income tax, the consultant should also help you understand the legalities of certain issues such as inheritance or divorce and their implications on your financial situation. Choosing a tax consultant with good communication and conversational skills is a huge plus so that you can build a level of trust when it comes to your finances.