Tax Saving Formula
Tax saving may be
calculated by multiplying the expense with tax rate applicable in the country.
Tax saving concept is widely used in discounted cash flows. Tax saving is
treated as reduction in cash outflows.
Tax Saving = Expense x Corporate Tax Rate
Tax Saving Example
Expense = 40,000
Corporate Tax = 30%
Calculate Tax Saving?
Solution
Tax Saving = Expense x Corporate Tax Rate
= 40,000x30%
= 12,000 (Tax Savings)
