The goal of tax planning is to arrange your financial affairs in a manner that it minimizes the impact of taxes. This should also play a major role in the financial planning and investment decisions to meet the long term financial needs of an individual. In a country like India where we do not have a social security, it is also important to secure the future of the family as a part of financial planning. With intent to promote savings the government provides various tax benefit schemes on different financial planning tools. It is extremely important for an individual to understand these benefits and align their long term financial needs in a manner which maximizes the tax benefits.
How to plan for tax savings
Tax planning needs to be "planned" and have to be done with extreme care, after a detailed research and understanding of the options on offer. However, most taxpayers tend to defer this decision to March and then rush into putting their money into anything and everything with the sole objective of saving tax for the year. As a result, the returns are likely to be not commensurate to the amount invested and might not serve financial planning needs.It is therefore of utmost importance that one must do his planning in a timely manner with focus on products that can result in good returns as well as help in saving tax . Also, the product must be chosen based on their long term merits and in such a manner that multiple life goals can be fulfilled.
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