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Here’s Why You Shouldn’t Wait for February Every Year, to do Tax Planning

  7/24/23 6:58 AM

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Often, salary earners tend to look at tax planning only by the month of February. But is it okay to follow this pattern? The answer is certainly “No”.

Given an opportunity, you’d surely want your savings and expenditures to be well-planned. Tax planning presents a golden chance before you – to plan your finances well.

Choosing income tax saving options at the right time can help you with efficient financial planning for the rest of the year.

Although taxes help you contribute to the nation’s welfare, yet our government provides well-defined options to save your income tax. So, it is only wise to consider all the tax exemptions, wherever possible.

Beginning your income tax planning as the financial year commences, has great benefits, like the ones we’ll explore below. The best method of tax planning is to chalk out a financial plan, keeping in mind your upcoming income scalability. Post that, you’ve to stick to the plan to make your planning successful!

But hey, pause for a moment. Even if you’ve missed out on tax planning in the previous half of the year, don’t sweat. You can still make up for your lost time by starting now.

There’s a variety of tax saving options in India, for instance, Life Insurance, Unit Linked Insurance Plan (ULIP), House Rent Allowance (HRA), Equity-Linked Saving Scheme (ELSS), Provident Fund (PF), Fixed Deposit (FD), etc.

Whereas some investment types can get confusing, Life Insurance and ULIPs are the easy bits. Life insurance gives the opportunity for tax exemptions, financial cushion, plus life cover. And ULIPs help with wealth creation and tax benefit.

Benefits of Tax Planning Earlier than Later in the Year

Let’s look at what’s in store for you if you start planning your taxes early:

1. Skip Lump Sum Payment Options

Usually, if you opt for a tax saving option just before year-end, you’ve to make a lump sum payment. So, rather than choosing one big income tax saving plan in February, it is better to make a series of twelve (12) investments starting from year-beginning itself.

For instance, is it easier to make a one-time investment of Rs. 60,000/- or a monthly payment of Rs. 5,000/-? You have your answer! As a taxpayer, you’d perhaps love to balance off your tax liability to reduce burden.

2. More Time to Make Well-Informed Decisions

Starting your tax planning early gives you ample time to choose the right mix of life insurance, investment, and tax-saving products. Being a smart taxpayer, you should be on the lookout for multi-dimensional plans. You’d go for something that:

  • Suits your financial planning,
  • Gives maximum tax savings,
  • And secures your family’s finances, even when you’re not around.

So, spend enough time looking for the right mix!

3. Things to Compare in your A-La-Carte

A smart tip for good tax planning is to even look at the brand. Companies like Edelweiss Tokio Life are a trustworthy organization, where you can secure your savings. Suppose you visit a restaurant; you’ll have many options before you. So, make sure that you compare across the categories, and then finalize your order.

In investments, you’ll come across hybrid products also. For example, ULIPs help you invest in both debt and equity, and also give life insurance tax benefits. So, start your tax planning early to analyze products, across segments and brands.

Prevent your Tax Planning from being a Roller-Coaster Ride

The objective of tax planning is not to just save taxes, but also to maximize your benefits. So, to reach your financial goals, make the move early.

Planning your taxes by year-end could lead to certain drawbacks, such as making erroneous decisions, ignoring tax exemptions, etc.

With competition increasing, life insurance companies, for instance, Edelweiss Tokio Life, are designing products that address unique consumer needs. We have a range of products to choose from – be it for protection of your family’s future, wealth creation, or retirement planning!

To know more about the tax saving products, click Savings Investment Plans.

 

Neha Panchal - Financial Content Writer

Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.

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