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Monday, January 31, 2011

5 Things to consider before: Tax Planning

Evaluate your options

Know the options, risk associated and lock-in period associated with the tax saving investment option under Rs. 1 Lakh Limit (Section 80 C)

Choose your objective

Know the capital gains tax treatment (short and long term) of the investment option

Plan cautiously

Hurriedly investing lump sums as a quick tax saving scheme could have potentially adverse results. You also lose on one of the biggest benefits in investment: the power of compounding. Think carefully before investing; never rush in!

Health is wealth

Invest in a health insurance scheme, if you don’t already have one. It’s a smart tax saving tool on a premium of upto Rs. 15,000 p.a., and gives health cover as well!

Avoid rush hour tax planning

Don’t leave tax planning to the last minute. This may create a liquidity crunch. Plan your taxes well in advance, and invest at regular intervals rather than in a lumpsum.

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