The month of March, popularly known as ‘tax season’, brings with it the flurry of making last-minute investments for tax planning. Wondering as to how and where to invest?
Here are some tips to help smoothen the process for you:
1. Budget your investments
Ideally, try to spread out your investments to the extent possible, in order to avoid putting a strain on your finances. Consider your expenses to determine how much you would be able to invest.
2. Understand tax benefits
Note all the deductions under the Income Tax Act, 1961 that you are eligible for, whether salaried or self-employed. Once you ascertain this, you can determine the amount you need to invest in order to maximize your savings.
3. Make an inclusive plan
Don’t view tax planning in an ad-hoc manner; keep in mind your overall investment strategy before you invest. Your financial goals should be met, in addition to tax saving.
4. Choose the right instrument
It can often get confusing with the various investment options available, as to where to invest your hard-earned money. Choose wisely, choose well.
It is prudent to undertake tax planning at the beginning of the financial year itself, to avoid any last-minute tax-saving investments. This evens out your investment and helps you avoid a possible cash crunch at the end of the fiscal year.
Remember to keep your financial goals in mind while tax planning and choose the investment tool that best suits your needs.