Tax planning for the new financial year
Upstox
2 min read • Updated: February 16, 2024, 5:46 PM
Summary
Tax planning can help you avoid the mental load of dealing with a large tax liability while filing taxes and saving money. In order to carefully consider different investment options and make informed decisions, it is best to start early. If you want to avoid mayhem around the end of a financial year, it is best to start tax planning early. By creating a solid tax plan for the upcoming year in April, you give yourself enough time to gather investment proofs and receipts, gauge an estimate of your tax liability (if any), and research different investment options. Certainly, there are different tax-saving investments you can consider before the financial year ends, but you can leverage the time and make smart decisions with your money if you start early.
3 Tips for tax planning
1. Maximise your tax savings
- Under Section 80D, you can claim deductions for health insurance premiums up to ₹1,00,000.
- Section 80C allows you total deductions of up to ₹1,50,000 for investment instruments like Public Provident Fund (PPF), National Pension System (NPS), and more.
- Under Section 80G, you can claim deductions for your contributions to eligible charitable institutes.
- Section 24 allows you to claim deduction for interest payments on home loans up to a specified limit.
2. Make informed investment decisions
You need to make wise investment choices after careful consideration of pros and cons of each available option to maximise your tax savings and build wealth in the long run. The best investment opportunity for you will depend on your needs, knowledge base, and preferences.
Besides, if you start planning early, you can be more mindful of where to invest your money instead of scrambling for tax saving investments near the end of a financial year, which can leave you with limited options.
3. Feeling lost? Consider professional help
If you are unsure about how to claim deductions and report expenses to save taxes and don’t want to invest time or resources in learning the ins and outs of the tax code, consulting with a professional is a good option. People who run several businesses or freelancers, for example, can benefit from professional help in navigating the Indian tax system.
Bonus tip: Although there is no change in the direct taxes in the Interim Budget 2024-25, keep an eye out for any changes in laws and regulations that affect your income and taxes.
Conclusion
Tax planning is an excellent tool that helps you manage your finances efficiently. If you start incorporating this in your personal and professional finances, you can better track your finances and identify areas with tax saving potential.
If you have no idea about where to begin your investment journey, Upstox provides you with all the necessary tools to invest simply in affordable and accessible opportunities.