Experience Hassle-Free Tax Planning
Are you one of those taxpayers who start making investments in the last quarter of the financial year? If yes, try exploring round-the-year tax saving options.
Once you start treating your investments as a year-round activity, you’ll probably never want to go back to making last-minute investments.
Round-the-year tax saving options have impactful benefits. We’ll list down four benefits that you’ll gain by planning taxes earlier than later.
Here’s How You Can Benefit from Round-The-Year Tax Saving Options
- Balanced Inflow and Outflow of Wealth
Tax planning round-the-year has a direct relation with your net income. Whether you’re an employee or self-employed, you’re eligible for a monthly salary or a regular retainer income respectively. Therefore, you should set aside some portion of this monthly income for good tax saving options. In this way, you can benefit from a balanced monthly inflow and outflow of your wealth.
- Steer Clear from Late Investment Proofs
Generally, employees are asked to submit their investment proofs towards the end of the financial year, i.e. between January and March. By analyzing the investments you’ve made over the financial year, your employer can adjust your TDS, if applicable.
If you don’t submit these documents in time, you may end up with more TDS deduction from your pay. So, you’d be wise to make your investments round-the-year, and submit the proofs on time.
- Invest Early and Grow your Savings
If you organize your investments well, you’ll be able to save a significant chunk of your income on time. Longer the duration of your investment, the more time it gets to grow.
By contributing towards your tax regularly, you get to be consistent. Even small monthly investments make your savings grow appropriately.
- Benefit from Market Volatility
Investing a fixed amount at regular intervals is a method of tax planning, called rupee cost averaging (RCA). RCA can help you overcome market fluctuations when volatility in the market tends to settle.
In addition, consider equity-linked tax saving options like ULIPs. If you rush towards year-end and invest a lump sum, then you are ignoring the net asset value. By chance, if the price is high at the time of buying, you may end up with an abnormally higher investment.
Be wise to opt for round-the-year tax saving options instead of lump-sum payments by the end of the year. The last-minute rush to invest for tax saving investment options does injustice to your entire financial portfolio.
So, plan your taxes well and seek maximum benefits.