Tax is an important aspect of our economy but sadly many people try to avoid it. We should all understand that the tax we pay to the government is for the benefit of the nation only. At the end of the day, indirectly the money is going to flow back to us through developments and progress of the economy. So, instead of avoiding taxes, you could focus on effective tax planning that will help you not only to fill your taxes on time but also save money for your brighter financial future.
An effective plan will also include the right time to start the tax planning India. The irony is that many old taxpayers themselves don’t know the correct time to start their tax planning strategies. Just like many others, their thinking also starts when it’s almost the end of the fiscal year and you are not left with any choice. Let me tell you a fact, the more early you start, the better it is. Try to gain the first mover advantage in anything and then sit back when it’s time for the rewards. In the field of taxes, many experts suggest that tax planning should begin right from the start of the new fiscal year. Sounds crazy? But that’s the truth!
In this article, we will focus upon some of the best advantages that one gets by starting off with early tax planning in India. There’s no need to create a hype about all this as it’s not some sort of complex task, you just need to understand the basics and you are good to go!
Advantages to Start Early Tax Planning India:
1. Easily Choose the Correct Tax Saving Instruments
Financial planning is more important than tax planning. The fundamental rules say that choose the instruments wisely so that you can achieve the financial goals and at the same time save the tax outgo. But this can only be achieved when you have the most valuable thing in your hand: Time! Once you are able to analyze your financial goals pretty well, then only you can choose the right tax saving instruments made for such goals.
If you are a person who acts in the last moment, then you are unfortunately going to end up Investing in any sort of instruments that can just save your tax outgo. In the hustle-bustle, you are not able to judge the instrument’s appositeness to your goals, ultimately ending up with wrong instruments. The investment in any wrong avenue is the worst mistake you can make from a business point of view, but the good part is that you learn with time and your wrong attempts. So, take out time, plan out your goals and then the taxes.
2. Earn Your Higher Returns
The return earning potential effects to a lot extent when you choose to dump the taxes in a lump sum amount at the end of the year. Trust me, when it comes to regular investments, the returns are pretty good in a number. Let’s not talk in just random sentences and help you get a clear idea by some examples:
One of the most popular tax saving instruments is ELSS scheme. You are free to invest in SIPs of ELSS schemes right from the beginning of the fiscal year or you can keep it for the end and invest in one lump sum. Similarly, is the case for another popular tax saving instrument just like the ELSS schemes and i.e. the PPF schemes. In both the situations, one factor is common which is that you will miss the regular returns of every month as you chose to invest in a whole amount at the end of the fiscal year.
We hope that the above examples would have given you an idea. SIPs are considered to be more fruitful as they can help you earn higher returns, provide rupee-cost averaging, etc.
3. Attain Maximum Tax Saving Advantage
There is a lot of hype around 80C investments, but there’s a lot more than that. There are many choices to choose from other than your regular platforms offering tax saving benefits. The reason you don’t get up to know about many of the tax saving avenues is that you take the action in the last minute which just makes you spend higher tax which you could have definitely avoided. To make things easier on your side, start early and get in touch with a good and reputed tax consultant who can inform you about the tax saving platforms which are available for you.
Tax saving is an art which is thankfully not that hard to master if you know the right approach. To choose the best tax saving options, try to keep a few factors in mind that includes risk profile, tax liability, inflation rate, lock-in period, financial objectives, and personal tax bracket.
The days are gone when tax saving used to be a complex task as there was no outreach of free knowledge through digital media. Today, whatever information you require related to your tax planning strategies, can be extracted within minutes.
We hope that you would have understood that last minute tax planning is of no use as it only yields in negatives results like inefficient investments and lower savings. It’s very important to know and analyze all the tax saving routes yourself. If you have any further queries, then hit us down in the comments section.
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