THE BEST TIME TO ACT TO SAVE YOUR TAX IS ‘NOW'!!

Tax Planning

- Motilal Oswal

With five months to the end of the financial year, many of you would be waiting for your employer to send a reminder to share your provisional receipts. But why wait till January 2022 to start your Tax planning. Why not now?

Do you recall the last-minute rush – where you hurriedly filled up an insurance application taking the advice of your colleague or used the first option suggested by your favourite search engine? Do you regret collecting four different tax saving instruments/funds chosen over the years due to this lastminute rush every year? Now, as these images run through your mind – take a step back and ask yourself – should investing decisions be made in spur-of-the-moment or done with advanced preparation and deliberation?

The tax declaration window for salaried employees generally ends in January, which is three months away and you can very well avoid making any lastminute errors. The first step would be to zero down the vehicle that you would choose for saving taxes. I recommend Long Term Equity Funds under the ELSS category.

An ELSS or Equity Linked Savings Scheme, is a mutual fund scheme that allows an individual or HUF a deduction from total income of up to Rs. 1.5 lacs under Sec 80C of Income Tax Act 1961.

One question that could come to investors mind would be- why should I pick ELSS over Tax-saving FD or PPF.