Your last chance to avail these Tax benefits
You are aware of the deadlines for submitting investment proof to the employer. You’re also aware that failing to submit proofs can result in greater TDS and lower take-home pay. Still, procrastination is a hard habit to break, and you may find yourself in the same scenario as last year.
We agree that performing all the math and making tax-saving investments is not fun. Leaving tax preparation to the last minute, on the other hand, may lead to costly investment mistakes.
Take heart if you’re one of the people reading this who hasn’t yet prepared their taxes. YOU ARE NOT ON YOUR OWN.
In this blog, we’ll share with you four basic yet effective methods that Right Horizons Suggest its clients to help them finish their tax planning quickly while also avoiding costly blunders. So get a cup of coffee and continue reading…
Tip #1: Make sure you know how much tax you owe for the year.
The first step is to figure out how much income tax you owe for the year. Only if you owe a net tax will you be faced with the issue of tax planning.
When computing your income tax due, you must take into account all of your earnings as well as all of the deductions available to you under the tax code. The following are some of the common deductions that people overlook:
Tuition fees must be paid. Premiums for life and medical insurance Allowance for House Rent Donations to vetted organiz
Make sure you have adequate proof/documentation for the deductions you want to claim, such as a lease agreement, gift receipts, premium certificate, and so on. This will assist you in the event of a future tax assessment.
Tip #2: Examine the differences between the old and new taxing regimes.
You have an optional new tax framework in place, which is a substantial departure from last year’s Budget. What Right Horizons suggest is take new regime calls for a lower tax rate and fewer deductions. You can make the necessary calculations and select the most favorable regime for you.
Let’s say you’re a somewhat inexperienced investor with insufficient capital to make new investments. In that situation, the new tax system may be beneficial.
Assume, that you are a seasoned investor who has been making tax-saving investments every year and has a current home loan. In that instance, you may find that the old government is more helpful to you than the new regime.
Remember: If you are new to investing and taxation & this analysis seems too much work for you, Right Horizons can help you do your last-minute tax planning
Tip #3: Fill in the gaps in your insurance coverage first.
Assume you need to make new investments in order to lower your tax liability. Here, you should make sure you have enough insurance protection in the form of the following policies:
Term life insurance is a type of life insurance that lasts for
Self-insured, family-insured, and parent-insured
Preventive health examination
For young investors, making insurance a top concern is critical. If a breadwinner dies unexpectedly or a medical emergency strikes the family, the wealth corpus will not be adequate to safeguard the family’s future. Insurance acts as a solid foundation upon which you can construct your money castle.
Tip #4: Conduct a comprehensive analysis before making an investing decision:
It’s not only about saving money on taxes when it comes to tax-advantaged investments. It should also assist you in building long-term wealth and meeting your financial objectives comfortably. Consider the following variables before making a tax-saving investment:
Determine your financial objectives and when you will require funds – The longer you have before you reach your goal, the more risk you can accept.
Decide how much risk you’re willing to take. Simply put, this is the percentage of your investment you’re willing to keep in equity in order to sleep soundly at night.
To acquire a holistic view of the investment, consider the risk, lock-in time, liquidity, taxation, and other factors, as well as if the investment is consistent with your financial goals. Don’t be swayed solely by profits.
If you don’t have enough time to perform all of the above, consider investing in ELSS and PPF. Keep in mind that ELSS is a long-term investment, therefore don’t cash it out before 5 years. PPF, on the other hand, has a 15-year lock-in period.
Tax planning ahead of time can help you prevent a slew of costly financial blunders that can’t be reversed. Even if you’ve left it too late to arrange your taxes, there are still simple last-minute financial steps you may do. The procedures will assist you in reducing your risks and ensuring that your investments are in line with your financial goals.