Explain the "Permissive tax planning" and "Purposive Tax Planning" with respect to three examples of each.

Answer 6A(iii) Permissive Tax Planning: Permissive tax planning refers to the practice of taking advantage of tax provisions explicitly allowed by the law. This form of tax planning follows the letter of the law and involves utilizing specific exemptions, deductions, and incentives provided by the tax code. Example 1: Investment in Section 80C Instruments Example 2: Claiming House Rent Allowance (HRA) Example 3: Utilizing Medical Insurance Premiums Purposive Tax Planning: Purposive tax planning involves structuring financial activities or transactions in a way that minimizes tax liability, but the primary purpose of these activities is not just to reduce taxes. This type of tax planning aims at achieving business or financial goals while also gaining tax benefits. Example 1: Setting up a New Business in a Special Economic Zone (SEZ) Example 2: Structuring a Business as a Partnership or LLP Example 3: Investing in Infrastructure Bonds