The 2018/19 financial year has started. If your annual income is more than Rs 2.5 lakh in such situation, you should start tax planning immediately. Under current rules of Income Tax Act income is more than Rs 2.5 lakh annually.
When you do a job, it’s also important that you do it. Companies ask about your investment plan in April. If you don’t give this plan, the company will start cutting TDS on your income. If you start tax planning soon, you’ll have more money to save or invest and pay less.
Tax planning is very important at the beginning of the fiscal year. This gives you enough time to invest in the tax savings. So you can invest a little in tax saving opportunities throughout the year. At the same time, if you delay tax planning, you will have less time later to invest in tax saving options. It is not possible for everyone to invest more in less time.
More money is saved than with tax planning
Tax planning strengthens your financial position. Getting tax planning right will leave you with more money to save, invest, or spend. At the same time, you have to pay less tax. For tax planning, you first need to know how high your tax liability will be on your annual income.
Don’t just save taxes
Don’t just invest in tax savings. For example, people buy an insurance policy just to save taxes while not understanding what the features of this policy are or how much they get for the policy. If you don’t get cover in an emergency or return as needed, then it can cost you dearly.
The most important thing about tax planning is that you start early. Understand your tax liability. Set your long-term and short-term financial goals. After that, choose the best investment option to achieve your financial goals. After that, start investing.
Start investing in stock-linked savings plans
If you need to invest in a stock-linked savings program, you should start investing right away. There is no tax on investments in stock-linked savings plans. However, you must note that the blocking period for share-linked savings is three years.
Public provident fund
The public provident fund, i.e. the PPF, is also a great way to save on taxes. You can invest a maximum of 1.5 lakh rupees per year in PPF. However, when investing in PPF, you should know that you can only add money if you can invest for a longer period of time. The PPF account has a term of 15 years.
In the new financial year, there was a change in the income tax law with regard to health insurance. If you purchase health insurance for your wife, parents or children, you will get tax exemption on the annual premium up to Rs 25,000. The tax-free limit for the first health insurance contribution was 15,000. In this case, if you don’t have health insurance coverage for yourself or your family, then get it now.