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Edelweiss Insights When it comes to tax planning don’t wait for your client’s call

When it comes to tax planning don’t wait for your client’s call

Encourage clients to spread their tax investments throughout the year so there is no last minute haste.
Team Cafemutual Feb 13, 2019

IFA Niraj received an urgent call from his client Anil on January 15. He had declared 80C investments of Rs. 1.5 lakh in the investment declaration form submitted to his company. However, till date his 80C investments were just Rs.60,000 far short of the declaration that he had made!

As advisors, you may have come across a few clients who wait till the last moment for making the 80C investments. This puts a strain on their finances during the last three months of the financial year.  

Here is how you can help your clients plan their tax savings better.

Be proactive

Schedule a meeting in the first month of the financial year - April. Understand what are his ongoing investments (for e.g. SIP, home loan) and calculate the amount he needs to invest to reach Rs. 1.5 lakh. Your client can spread the balance amount over 12 months.

Educate him on any changes in tax laws

Explain to the client how he can use the tax changes proposed in the budget to maximize his finances. In the interim budget, the Modi government has announced no tax for income up to Rs. 5 lakh. This limit can be further extended if the person invests in 80C instruments, NPS, has a mediclaim, housing or education loan. Check if your client can avail any other tax exemptions and maximize his tax savings.  

Share the distinct benefits of ELSS

Among all 80 C investments, ELSS offers the shortest lock-in period (3 years). Moreover, only long-term capital gains (LTCG) of more than Rs. 1 lakh in a year is taxable.  By staggering his withdrawals, an investor can ensure tax-free returns on his ELSS investment. Finally, equities have a potential to beat inflation and generate long-term wealth for investors.

 

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