Its the duty of every individual to pay taxes, which should be followed religiously. Tax planning refers to the selection of right tax saving instruments and making proper investments.
Tax Planning relates to assessing our own financials during the years and ensuring that we plan our finances to utilise the available reliefs provided in the income tax act.
Proper tax planning demands an individual to compare several tax saving schemes offered by the market depending upon various factors such as age, tax slabs, social liabilities, etc. Every citizen has a right to avail all the tax benefits provided by the government. This not only helps one to save tax but ensures a better and secure future through the savings done.
Liquidity
This means that how fast would you want to withdraw your money? Usually all tax saving schemes provide a minimum of 3 years lock in period before which one cannot withdraw money from their savings.
Risk and Return
Risk and returns are related. Certain instruments provide low risk, but at the same time they provide low returns too.
Tax Exemption
All tax saving instruments provide tax exemption on the amount invested, they invest under section 80C. Certain schemes provide exemption on the returns generated as subject to the policy.
While undertaking tax planning, an individual should take the following steps:
Review your existing investments
The investor should jot down the present investments to determine the amount of value they add to their portfolio by saving taxes.
Allocate the investments
An advisor should allocate the investments in which income has to be invested. This will reflect the investors inclination in terms of risk.
Execute the Plan
Executing the investment plan is the final step in the tax planning process. The choice of the amount invested as well as the timing is important.
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Source : jumpstart
Tax Planning relates to assessing our own financials during the years and ensuring that we plan our finances to utilise the available reliefs provided in the income tax act.
Proper tax planning demands an individual to compare several tax saving schemes offered by the market depending upon various factors such as age, tax slabs, social liabilities, etc. Every citizen has a right to avail all the tax benefits provided by the government. This not only helps one to save tax but ensures a better and secure future through the savings done.
One should consider the following criteria before investing:
Liquidity
This means that how fast would you want to withdraw your money? Usually all tax saving schemes provide a minimum of 3 years lock in period before which one cannot withdraw money from their savings.
Risk and Return
Risk and returns are related. Certain instruments provide low risk, but at the same time they provide low returns too.
Tax Exemption
All tax saving instruments provide tax exemption on the amount invested, they invest under section 80C. Certain schemes provide exemption on the returns generated as subject to the policy.
While undertaking tax planning, an individual should take the following steps:
Review your existing investments
The investor should jot down the present investments to determine the amount of value they add to their portfolio by saving taxes.
Allocate the investments
An advisor should allocate the investments in which income has to be invested. This will reflect the investors inclination in terms of risk.
Execute the Plan
Executing the investment plan is the final step in the tax planning process. The choice of the amount invested as well as the timing is important.
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Source : jumpstart
