“A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.” – John C. Maxwell
The above proverb is very applicable to our day by day lives – be it dealing with funds or even in some other features of life. Same is the case with tax planning; many people tend to repeat a similar mix-up of holding up till the eleventh hour till the financial year comes to an end. Holding up till the eleventh hour drives the entire exercise towards minor “tax saving” instead of “tax planning”; which we accept is a suboptimal approach to attempt tax planning
Picking the correct tax saving vehicle depends principally on four things: How to avail tax benefits, the sort of tax-saving instrument, the tenure, and the taxability status? Similarly, it is critical to pick a tax saving instrument which can be connected to a particular objective.
The most effective method to profit tax cuts: One may consider Section 80C which permits yearly tax cuts of up to Rs 1.5 lakh in at least one qualified investments and determined expenses. The qualified investments incorporate unit-linked insurance plans, term plans, public provident fund (PPF), endowment plans, and so on.
Settling on the correct decision
In the first place, distinguish an objective, medium or long term. An equity backed tax saving instrument would suit long-term objectives as equities require time to perform. As wealth keeps accumulating over the long haul, attempt a tax-free investment.
Efficient tax planning ought to in a perfect world start toward the beginning of each financial year. Keep in mind, the dangers of tax savings later in a rush later are complex. There is, for example, a high likelihood of getting an unsuitable product in your portfolio.
Likewise, there is no one instrument that can enable you to save tax and in the meantime additionally give safe, guaranteed and most astounding return. Your last decision ought to in a perfect world be founded on a range of factors as opposed to exclusively being driven by returns from the financial product.