Financial Year 2018-19 has begun. In such a situation, if your annual income is more than Rs 2.5 lakh then you should start tax planning right away. Under current rules of Income Tax Act, income is more than Rs 2.5 lakh annually.
If you do a job then it is also important for you to do this. Companies ask for your investment plan in April. If you do not give this plan, then the company will start cutting TDS on your income. If you start tax planning soon, you will have more money for saving or investing and you have to pay less.
Tax planning is very important at the beginning of the financial year. This gives you enough time to invest in saving taxes. This allows you to invest a little bit in tax saving options for the whole year. At the same time, if you delay in tax planning then later you will get less time to invest in tax saving options. It is not possible for every person to invest more in less time.
More money will be saved than tax planning
Tax planning strengthens your financial placing. If you do tax planning properly, you will have more money to save, invest, or spend. Along with this, you have to pay less tax. For tax planning, first of all, you need to know how much your tax liability will be on your annual income.
Do not just save taxes
You should not just invest in saving taxes. For example, people only buy an insurance policy to save tax, while they do not understand what the features of this policy are or how much they will get on the policy. If you do not get cover or return according to your needs in the emergency, then it can be expensive for you.
The most important thing in tax planning is that you start early. Understand your tax liability. Set your long-term side and short-term financial goals. After this, select the best investment option to get your financial goals. After that start investing.
Start investing in Equity Linked Savings Schemes
If you have to invest in Equity Linked Saving Scheme, then you should start investing right away. There is no tax on investment in Equity Linked Saving Scheme. However, you must keep in mind that the lock-in period in the equity-linked savings scheme is of three years.
Public provident fund
The public provident fund, i.e. the PPF, is also a great option to save tax. You can invest a maximum of 1.5 lakh rupees in a year in PPF. However, while investing in PPF you should know that if you can invest for a longer period then only add money to it. The PPF account is for 15 years.
There has been a change in the income tax laws regarding medical insurance in the new financial year. Under this, if you purchase a medical cover for your wife, your parents, or your children, then you will get tax exemption on annual premium up to Rs 25,000. The tax exemption limit on the first medical insurance premium was 15,000. In this case, if you have not bought health insurance coverage for yourself or your family, then buy it now.