Plan Investment before the end of Financial Year

"Money saved is money earned, especially when it comes to tax-saving investments." - Rakesh Jhunjhunwala

There is no time like the beginning of the year to plan for your tax savings. Last-minute tax planning can lead to lower savings and bad investments. It is important for you to know the various routes to save tax on your income. You need to check if you are on the right track towards saving on taxes and take timely action in case you have missed any benefits. If you are looking at the ways you can save your hard-earned money from the tax-man legally, and reduce the tax burden efficiently preplanning of same maybe help.

The financial year is about to come and it’s a great time to see if your investments are still in line to make your coming years more successful and tension free. It’s high time to plan your investments before the financial year-end to save tax. To make our future more safe and secure, we all do savings in the form of multiple ways.

Plan Investment before financial year-end to save tax in advance like retirement, home, education, car, health and another important goal- an annual status check will help you to identify and track your investments. You never know when you stuck in what sort of circumstances and how all this could impact your financial situation. If you do not plan investment before the end of the financial year, you will end up paying a hefty sum. Come let’s figure out some investment plans before the financial year-end to save tax:-

ELSS mutual funds

Specially designed for tax savings, Equity Linked Saving Scheme or ELSS mutual funds are considered one of the best tax-saving investments. ELSS funds are market-linked products, which, though regarded as high-risk products, also offer higher returns. ELSS funds allow you to save taxes under Section 80C of the Income Tax Act of 1961. Also, ELSS funds are equity-linked products that come with a short lock-in period of 3 years. Moreover, ELSS investments can also be made through SIP or systematic investment plans, which allows you to spend a small, fixed, monthly amount as opposed to a lump-sum amount at one time.

Public Provident Fund

A top pick for a conservative investor, the PPF refers to the government issued, long-term savings scheme. Launched in 1968, the PPF tax saving scheme allows the investor to earn tax-free returns. Currently, you can earn 7.1% interest per annum on your PPF savings and is especially beneficial for individuals of high-income slabs. However, it is mandatory for one to deposit at least a minimum amount of ₹500 per annum, whereas the maximum savings per annum cannot exceed ₹1.5 lakhs. Also, the PPF scheme lasts for a minimum period of 15 years, and partial withdrawals can only be made after the 8th year of investment.

Unit Linked Insurance Plans

Regarded as hybrid products that provide both, protection and savings, Unit Linked Insurance Plans or ULIPs are regarded as great tax saving schemes because of they provide the investor with the much-needed life insurance policy, while also helping him invest in different market-linked assets, which help him meet his long-term goals. Most ULIPs come with 5 to 9 fund options, with variable asset the allocation between equity and debt. While the duration of ULIPs is approximately 15-20 years, there is a minimum lock-in period of 5 years. Also, the fund value of an ongoing/matured policy is tax-free.

National Pension Scheme

One of the few tax savings schemes, which allow the investor to surpass the maximum ₹1 lakh limit of deduction, as set by Section 80C of the Income Tax Act; the National Pension Scheme or NPS is also ideal for tax saving investments. Under this scheme, the percentage of the investor’s basic salary (not exceeding 10%), as contributed by the employer towards the national pension scheme, is tax-deductible. That said, the investor’s contribution towards NPS is still governed under Section 80 C, which allows you to surpass the ₹1 lakh limit.

Health insurance investments

Although not traditionally regarded as an investment for tax saving purposes, health insurance plans offer coverage that adds more value than any other form of investment. Apart from providing you security against unpredictable health scares, you also earn a tax deduction on health insurance plans, making them one of the best tax-saving investments. An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional/separate deduction for parents’ insurance is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 if your parents are aged above 60.

Advance planning is very much required in every sphere. The above mentioned are few of the important avenues one can look after for saving tax. Each person’s tax situation is different from one another and there is no fixed one set formula for a tax deduction. As tax deduction depends on every singles salary figures. So, Plan Investment before Financial Year End to save Tax.

People often look at the New Year as an occasion to strengthen their resolve towards things they want; whether it is going on a road trip or getting an excellent rating in their job. You can also use this zeal and motivation to bring about some changes in your finances this New Year so that by the end of the year, you will find yourself in a financially more stable and stronger position. Let’s see how!

o Track your expenses

o Figure out a budget

o Get your taxes in place

o Invest early

o Build a contingency fund

o Build a retirement corpus

o Make a credit repayment plan

o Strengthen your income source

o Take a budget holiday

o Invest in a variety of investment

o Review your financials

We hope that by incorporating these tasks into your monthly calendar, you will be able to put your finances in order and have a more robust structure in place when it comes to earning, using, and saving money.

Happy Tax Saving!