Did you mess up with tax savings previous year due to last minute rush towards the end of March deadline?
So, why not plan for tax saving since the start of the new financial year. We will be discussing about our point of view in this blog.
As Confucius said – A man who does not plan long ahead will find trouble at his door. So, it is always advisable to plan for anything in advance.
When we take decisions in rush, it is more likely that we take some wrong decisions and invest in unfavorable products simply because of lack of time to analyse among the options. When we start planning in advance, we have enough time and hence we can take wise decisions. For example, there are many options available that can help you save taxes like PPF, Sukanya Samriddhi Yojna (only for parents of girl child), health insurance policy, life insurance policy, Post Office NSC, KVP, 5 year bank FDs and much more. But all these options may or may not be good for you depending upon your risk profile, age, current financial situation, current investments, life goals etc.
Secondly, last minute rush can lead to additional stress to out already stressed life style. So you need to think over it and take proper guidance for the best tax saving option for you.
Here are some tips on how you can plan your taxes early every year to get optimum benefits from your investments, reduce your tax liability and be on the path to achieving your financial goals.
Start planning in April
The beginning of the financial year is a good time to start planning for tax saving. A great way is to invest in Equity Linked Saving Schemes (ELSS). We recommend you to follow the advice of your financial planner before starting. Your financial planner will help you analyse your risk appetite and advice you a good investment product that can help you save taxes and earn meaningful returns.
Instead of lumpsum investment in bank FDs which have become irrelevant with 5% interest considering 6-7% inflation rate, we can consider going for monthly investments in ELSS mutual funds.
Some of the benefits of SIP into ELSS include:
- Investment in a diversified basket of equity stocks in a staggered manner to take care of the highs and lows of the equity market.
- Potential for wealth creation through investment in equity.
- Disciplined savings every month.
- Easy on Pocket.
- Tax planning without losing sleep over it towards the end of the year.
Disclaimer: In view of individual nature of tax consequences, each investor is advised to consult his / her professional tax advisor. We are not indicating or guaranteeing returns on any investments. Readers should seek professional advice before taking any investment related decisions.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.