Checklist to help you become a Tax Guru

One thing that festive season can do, is to make time fly. Soon this quarter will zip past and we would be in the critical JFM (January, February, March) as they say. The last quarter will see the frenzy of tax planning, investing & saving, especially close to the year end. For those who discount tax planning leaving it for the very last moment, this checklist might help them become tax gurus.

1. Be proactive than a procrastinator when it comes to tax planning

Being proactive in planning & investing in tax saving options; help in having major savings. Though a little late but November-December is still a good time to start. Delaying can mean penalties. So one must choose wisely!

2. Make an appointment with your Chartered Accountant or financial advisor

Avoid the panic calls and hasty meetings. Meet your CA or your financial advisor now to know your tax liability and also to get all the proofs, deductions etc. in place.

3. You could DIY (Do it yourself) too

There's merit in both, taking professional help or doing-it-yourself. For example,if your EPF contribution or principalrepayment amount on home loans totals upto the deductible amount of Rs. 1.5 lakhs (under section 80C), you can file your own return. Many portals give you simplified platforms to file the returns yourself.

4. Look up online for tax saving products

Start with reading about different tools to invest in. Read other’s experiences about prudent tax planning. Identify as much as possible - your investment goals, investible surplus, risk profile, time horizon on your own. It will help you to choose the right product & invest your money wisely. While researching, remember to bookmark important sites, or leave your number for representatives to call back.

5. Start with knowing the basic 5 tax saving investment options

There are many options available under Section 80C. Some commonly used ones are Employee Provident Fund, Public Provident Fund, Life Insurance premiums, Tax saving Fixed Deposits and principal repayment amount on home loans. If you are using these already, you could expand your kitty with National Pension Scheme (NPS), National Savings Certificate (NSC) and Equity Linked Saving Scheme (ELSS). Each instrument comes with a pre-defined lock-in period. Remember to choose one which suits your needs.

6. Know about tax saving options –Those that give market linked return and those giving fixed or assured return

You can become a tax guru if you can tell difference between instruments giving market linked returns and fixed / assured returns and use them to your maximum advantage; you can also take the guidance of a financial advisor in this regard. Market linked instruments have higher risk but also aim to give you potential returns whereas fixed returns instruments will give you low returns as they carry low/no risk. We are listing down most of the tax saving instruments covered u/s 80c, subject to eligibility:
Tax planning with market linked instruments:
Unit Linked Insurance Plans, Equity Linked Saving Scheme, National Pension Scheme, Pension Funds
Tax planning with assured returns instruments:
Public Provident Fund, Sukanya Samriddhi Scheme, National Savings Certificate, 5 year Bank Fixed Deposits, Post Office Tax saving Deposits, Senior Citizens Savings Scheme, Non- ULIP Insurance plans.

7. Know the difference between tax saving and tax planning

At the end, remember that tax saving is a quick one-time effort to save on paying higher taxes. On the other hand, Tax planning is done over a longer period keeping various things in mind (see point 4). It not only save taxes but also seeks to create wealth.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

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