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Four Reasons to Start Your Tax Planning Now!
 
You have worked hard throughout the year to earn your money, but have you worked equally hard to save taxes? Most of us keep on delaying this task and start thinking about it only when they receive mail from their office that they have to declare their investments. We will normally start working on this in January and plan to send the actual proof of investments in January.
 
The first thought that comes to mind is that there is ample time and we will finish it well before February. But by that time we would have missed almost the whole year available for tax saving investments. if you wait till the last moment for submission of investment proof, you do not get sufficient time to plan for tax saving and search the best possible options. This delay also causes a big outflow towards the end of the year and may put you under financial strain which could have been avoided if you had been saving regularly since the beginning of the year itself.
 

 

We are highlighting four key reasons to start early for tax saving –

 

1. More time for investments – more returns: If you start early, your money remain invested for longer time generating more returns for you. It is because of the concept of compounding of the interest, the longer you remain invested, the higher are your returns.

 

2. Start Early – Get More Options: If you have started early to plan your tax saving investments, you can find a number of options are available from which you can select the ones suitable for you like - PPF, New Pension scheme, Sukanya Samriddhi, Insurance or tax-saving mutual funds.

 

3. Maximum Benefits by Overcoming Market Fluctuations: If you plan to invest in market linked tax saving instruments like ULIPS or ELSS, you face a grave danger of investing when markets are at a high if you invest in lump-sum. If markets fall and you had invested in a hurry at the end of the year, you may suffer heavy losses. The most effective and best way to overcome this is to invest regularly small amount every month. Using online SIP (Systematic Investment Plan) in ELSS (Equity Linked Saving Schemes) mutual funds is the choice of most smart investors.

 

4. Delaying tax saving increases financial burden: If you are making the tax saving investments towards the end of the year, your tax burden will be increased, you will get less take home salary and you will have to go through the hassles of claiming tax refunds. To avoid all these problems, simply start early and avoid stress at the end of the year.   

 

 

RRResearch/Three Principles of Financial Freedom/23/Aug/2017

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