Tax saving is something that all of us typically think about only in the last quarter of a financial year. As we enter January, we get an email from our company’s HR department to submit our tax-saving details for the year. This email makes us realise that we haven’t made any tax-saving investment yet. We rush to invest to save taxes and end up making hurried investment decisions.
Sure, even this way, we do end up saving tax. But that shouldn’t be the sole purpose of tax-saving investments. When planned and executed properly, tax-saving investments can help you build wealth over the long-term as well. By their nature, tax-saving investments are long-term and can be used for long terms goals.
Under Section 80C, a taxpayer can invest up to Rs 1.5 lakh in an year to save tax. This is a decent amount to build a corpus of wealth as well. But these investments should not be done in the last few months with little time and after little thought. These investments should be planned and started in the beginning of the financial year itself. Here is how you can plan your tax-saving investments for FY2017-18 to make maximum gains.
- Figure out the tax-saving expenses that you can claim
- Build a portfolio of tax-saving investments
- Make good use of ELSS funds
- Link investment to goals
- Don’t invest and forget
- Think beyond 80C