July 31 signifies the deadline for filing your income tax return. It also reminds you that four months of the current financial year—April, May, June and July—are already gone. To plan your investments from the tax point of view, you have only 8 months left!
Although there is no need to panic, it is better to start checking out the various options available to you that allow you to save tax based on Section 80C of the Income Tax Act. Under this section, you can invest a total of up to Rs.1 lakh and deduct the invested amount from your gross annual income. You can consider investing in unit-linked life insurance plans (ULIP) that offer you life cover as well as decent returns and/or growth. Or if you prefer stability, Public Provident Fund (PPF) is a good, safe option, with tax-free interest on the investment. Or if you do not mind parking your funds for 6 years, you can get the same safety (but with interest earned being taxable) from National Savings Certificates (NSC).
What is important is to assess your short term and long term financial needs first. Then look at the amount of funds you have. If you have a small capital base but decent, regular income, you can opt for a Systematic Investment Plan (SIP) option, if available. Conversely, if you have a decent capital base with good earnings from it but have low savings due to inflation or increased needs; you can plough your capital gains or interest earnings into appropriate investments and derive the tax benefit.
For detailed financial planning and counseling, it is advisable to approach a professional, who can guide you personally, looking at your unique requirements.
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