This is that time of the
year when most of the people are looking up to the festive season. It is
a good time to talk about the tax planning which we can do for the current
financial year so that we can be equipped to maximize on our tax saving potential.
So, how do you go about saving on your income tax? Read on to know more!
The first and foremost step is to educate
oneself on the following:
- The tax bracket under which one falls without any tax planning and with tax planning
- The various tax planning options available
- One’s saving capacity
- One’s monthly expenses
- Understand how much should be saved and invested per month to maximize on tax planning
- Planning on the expenses for the upcoming financial year
- Monitoring expenses and investments
- Seeking professional help, in case of need
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Evaluate your options
Once you have educated yourself about the afore
mentioned points, it is time to evaluate all the tax saving options that you
have. You have to carefully weigh the merits and demerits of each tax saving
option available. Furthermore, you have to surely evaluate your risk ability as
it will help you choose on the tax saving options wisely.
Strategic and invest
Once you are aware of all the options on
investments that you have, it is time to come up with a few investment
strategies which you can adopt as per your situation. Some of the important
facets of your investment strategies should be:
- It should be a mix of debt and equity tax saving instruments.
- Insurance has to prominently feature to cover your liabilities
- Your strategy should be sustainable in the long run: there is no point trying to allocate 75% of your earnings to savings and plan based on that
- Should leverage the lock-in periods in a manner so as to coincide their maturity with your long terms needs
- Your strategy should give you enough room to pivot and change if the investments are not giving adequate returns
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Choose your strategies wisely and invest to both
increase your savings as well as save on taxes! A double treat!
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