When is the right time for tax planning

Congratulations on making it through to another tax season! Have you ever thought why most people tend to wake up in the month of March to save tax? This is, because they consider tax planning as one-time ritual that will help them from paying taxes. All they want is to get the maximum possible income tax benefits.

Tax planning is not something you should wait till the end of the financial year; it’s something you should start early and build on it.

Tax planning should always be considered as a part of your overall financial plan. While tax saving is important, investments made for this purpose will also help you move closer to your financial goals.

If you start your tax planning early, you can…

• Avoid the risk of locking your funds in an unsuitable product
• Have lesser burden at the end of the financial year as investments get spread over 12 months
• Achieve your financial goals

Follow the below given Steps for optimizing your Tax Planning:

• Determine your Tax Liability – Calculate the amount of tax liability and the amount of deduction you want to claim based on the estimates of your income for the financial year
• Determine the amount of Fresh investments you need to make – Evaluate whether your current investment towards tax planning will be sufficient enough to meet the amount of deduction you require.
• Choose the right Instrument
• If you don’t have sufficient life cover buy a term life insurance
• Adequate Health insurance cover is equally important as it takes care of your physical and financial health during a medical contingency.
• Important things to be kept in mind while selecting tax saving instrument for investments:

                - Goals

                - Risk appetite

                - Lock in period

                - Inflation

                - Taxability of Income

                - Your personal Tax slab

Conclusion
Tax planning should ideally begin at the start of every financial year. Remember, the risks of planning tax-saving in a hurry later are manifold.

So, start early and plan for your taxes for FY18.