Planning for you tax saving investments at the beginning of the financial year is very critical (April - it's time to plan your taxes )and can be very handy for you. I would like to quote examples of two persons I know. The first person always plans for his tax saving investments in advance. This year too, he needed to save Rs 48,000. He planned out an SIP for 8000 for 6 months starting May'07 in a ELSS MF (tax saving mutual fund). His SIP got over in Oct07 and he is ready to present his savings to his employer by end of October'07 ( his employer needs it only by Jan'08). Now apart from saving 30% taxes on amount invested, he also has earned more than 10,000 as unrealised profits on his investments( thanks to the bull run !!).
My second friend starts thinking about tax planning only on January 1. His employer needs tax proof to be submitted by Jan'10. He never saves too. So, he is thinking between taking a personal loan for investing or paying 30% tax instead of saving.
Both of these friends almost earn the same amount and spending patterns are also similar. But the second person also spends a bit extra as there is no commitment like SIP.Planning for your tax investments always makes a difference. If you keep investing throughout the year, you tend to gain a lot as you don't feel the burden of investing a huge amount. You also need not fall prey to year end rush which can make you take a wrong investment decision too.
Always plan for your taxes in advance.Happy tax saving!!.
ELSS= Equity linked saving scheme.