Why Should You Not Delay Your Tax Planning

As soon as the tax filing month starts you see a common sight where people are rushing to file their taxes before the deadline. Those who had planned their taxes and filed it in advance are sitting back and relaxing while the others are running around still calculating the tax exemptions.,

We all have the same aim. Notto pays extra tax and saves as much as we can. And this is why it pays to start planning and saving your taxes well in advance.

Start tax planning from the start of the year

It is always advised to start planning your taxes the start of the year. You should begin by identifying the changes that you may have in your personal situation. This includes higher income, buying of property or a change in your career. Any changes in your personal life that could affect the tax amount, as well as the changes in the tax laws, will impact the amount of tax that you will have to pay this year.

If the tax status stays the same then you will not have to make a lot of adjustments to your plan. However, it is important that you get your personal finances in order and do the right tax planning at the start of the year in case you wish to save for any important financial goals.

The benefits of planning your taxes early

There are many benefits to start planning your taxes early:

  • Benefit from compounding –Do not just put your complete focus on saving taxes but think about the longer-term. Tax planning should go hand in hand with your investment planning. You should start investing in these tax saving instruments early and benefit from the extra interest that it offers. You could choose to invest in equity or debt finds to save taxes. For either way planning early means that you can benefit from the power of compounding
  • Regular investing – Investing regularly lets you meet your financial goals early. If you start your tax planning early then you will not feel the pinch of paying a lump sum at the end of the year. Also, suppose you are buying tax saving mutual fund plan than investing monthly will let your investment average out in the market.
  • Other deductions – Apart from the tax saving instruments one can also enjoy other deductions to save on This includes tuition fees of children, health insurance, and home loan repayment etc. If you are planned it can make it easy for you to get all documents together to claim a tax rebate
  • Salary allowances – Planning to save your tax ahead in time also lets you optimize your salary well. Make a note of all the allowances and how it can help you to save on Some employers also let you change the salary structure to save more on taxes. To be able to do that it is important that you do your tax planning at the start of the financial year.

 

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