The last-minute rush can cost individuals a pretty penny, especially when it comes to tax-saving. And, what do you believe is the explanation behind such remarkable delay to invest? Cash crunch would be the last reason. Maybe, it’s the other way around.
Individuals who can afford to contribute Rs 1.5 lakh at one go, frequently dawdle during the year thinking they have a lot of time for tax planning. They get immersed in their schedule, the clock continues ticking and days pass. Come March; these people wake up and make investments to decrease their tax liability. And in a hurry, they make wrong decisions.
So, what’s the right time?
Quite simple, begin your tax planning from the beginning of the financial year (May or June itself), instead of waiting until the end of the financial year (March).
You Can Make Better Investment Decision
Mostly, people scurry around and deal with baffling alphanumeric combinations of Section 80C and 80DD at the end of the financial year. However, such last-minute tax-saving efforts can lead to locking funds in an unsuitable investment.
But, May to June is a good time to begin tax planning process with an eye on tax-saving and investment objectives. You get ample time to research and lock-in the most suitable investment vehicles as per your needs and goals.
Increased Salaries Are Finally Coming In
March to April is also the time for companies to appraise their employees in terms of designation and salary. However, in most cases, the actual increase in salary comes in May.
Usually, we would have a long list of expenses ready on hand, weeks before the increment arrives. However, little patience with the list can have great positive effects on your plans and life.
With more funds in hands (due to increased income), you can better plan towards decreasing your tax liability and invest likewise without any financial burden.
You Can Maximize Tax-Saving
By staggering your payments in 10 months, you just need to save Rs 15,000 p.m. instead of Rs 1,50,000 in one or two months.This not only cushions you against market volatility but also lightens up the burden at the end of the financial year. It’s easier to spare an amount each month rather than putting a lump-sum amount at one go in March.
Investing in Equity Is Better in Regular Mode, Rather Than Lump Sum
Investing in equity-related instruments like ULIPs or ELSS has dual benefits- tax planning as well as long-term investment planning (to achieve your goals). Moreover, ulip benefits are immense; insurance + investment vehicle, many fund options, switching option, top-ups etc. ULIPs are one of the very rare instruments that help save taxes and grow your wealth at the same time.
Also, availability of monthly premium payment option (ULIPs) does not strain your pocket. Through regular investments in equity related instruments, you invest in the markets during higher as well as lower levels, thus, getting a weighted average return over a period (instead of making a lump sum investment in March).
Advantages of Starting Early
Time and again you must have come across these words- ‘Invest Now’. Quite a lot of emphasis is given on these two words. Why? Because investing early in your life means lower premiums for tax-saving plans like term and health insurance. The reason for this is quite simple.
The younger you are, the healthier you are. However, as you get older, your risk of contracting critical illnesses or lifestyle diseases increase. Therefore, from the insurer’s point of view, you become a much riskier investment than before, and hence the increase in the premium rates. So, without wasting further time, get into the tax planning mode from the beginning of the first financial quarter.
We usually tend to postpone things until the deadline arrives. However, the risks of tax planning in a hurry are manifold. Therefore, start now,and invest in a suitable instrument that caters to your tax-saving need sand your life goals. So, keep aside all your excuses and start the tax planning exercise right now.
You can enjoy ulip benefits offered by Future Generali’s ULIP plans and begin your tax-saving.