5 Things to consider before: Tax Planning
Evaluate your options
Know the options, risk associated and lock-in period associated with the tax saving investment option under Rs. 1 Lakh Limit (Section 80 C)
Choose your objective
Know the capital gains tax treatment (short and long term) of the investment option
Hurriedly investing lump sums as a quick tax saving scheme could have potentially adverse results. You also lose on one of the biggest benefits in investment: the power of compounding. Think carefully before investing; never rush in!
Health is wealth
Invest in a health insurance scheme, if you don’t already have one. It’s a smart tax saving tool on a premium of upto Rs. 15,000 p.a., and gives health cover as well!
Avoid rush hour tax planning
Don’t leave tax planning to the last minute. This may create a liquidity crunch. Plan your taxes well in advance, and invest at regular intervals rather than in a lumpsum.