The story of every service man is the same. As the month of March approaches, they roll their sleeves up and get ready to embark on the inevitable tax-filing mission. Yes, that’s good; you are a responsible citizen after all! But do you have any good tax saving plan at hand? What about 80 C investments- are you making any? Or are you going to let all the tax get subtracted from your salary, like some of your imprudent colleagues do? Well, you are no routine employee. And don’t act like one! You are prudent and that is why you are here. If you want to know how to do tax planning in an effective manner, read on. Here, we have simplified tax planning for you-
How to handle your tax liabilities with tax planning?
The process of fulfilling an objective must begin with planning. But planning is not that easy when it comes to tax saving. In fact, you must think twice before coming up with a tax saving plan and declaring it to be your ultimate go-to (a plan you will always look up to). Remember! The purpose of tax saving is to reduce the burden of taxes you have on your shoulders. And that is why it’s better to stay away from clumsy roundabout tax saving options. Also, because no one has the time to take roundabout ways of saving taxes, any straightforward route comes as a boon for a tax payer. One of the best and the most straightforward way to saving taxes is investing in schemes meant especially for this purpose.
If you want to know about your tax liabilities before making any investment then you can easily calculate it with the help of tax calculators abundantly available online these days. Your tax saving plans should always be in sync with your liabilities.
You are done with preparing your tax saving plan; it’s time to execute it. Figure out which avenue would be the best in this respect- the best way to save taxes is to make direct tax saving investments. Now, the million dollar question that pops up here is- which investment option to choose? Well, although you can choose any investment plan, the ELSS Mutual Fund investment has amazing benefits on offer for its investors. This investment tool offers exemption from tax under section 80c of Income tax act. With an exemption offering of up to 1.5 lac, this scheme indeed happens to be the best you can opt for.
Equity linked Saving Scheme or in short, ELSS is in essence, a mutual fund scheme meant to be used as a tax saving instrument according to provisions of the income tax act. The scheme has its funds invested in equities and equity linked instruments. This plan, having a lock-in period of three years, offers exemption from tax in an effective manner. And it’s not just tax saving benefits that you get when you invest in the ELSS scheme; it also helps you build wealth. The scheme endeavors to maximize profits by investing funds in high growth companies and sectors.
Although there are many benefits of investing in ELSS, we have dished out here some of the most important ones-
ELSS follows the EEE or Exempt-exempt-exempt model. When a scheme falls under this model, the income it offers, the capital you gain from its sale, the interests as well as the dividends it provide- everything remains exempt from taxes. As a result, it’s not just the first year when investors save taxes, even after that the trend continues.
- Tax saving investment planning and wealth creation-
ELSS makes investments in equity shares and stocks of companies. That means, investors can earn profits when the companies in which their funds are invested grow. And because the lock-in period for ELSS is three years, the funds get sufficient time to grow. It’s advisable that you remain invested in this scheme for longer as it also is an amazing way to build wealth.
Tax planning is something that can save you a lot of money over years. So, the sooner you become aware, the better it is. And because, tax saving is no daunting task with amazing tax saving mutual funds in place such as the equity linked saving scheme, you shouldn’t make any delays as far as tax planning is concerned. So, what makes you wait? Contact your financial advisor today, and get geared up for an ELSS investment.