Tax planning for long-term benefit

With just around 100 days left for the financial year to end, salaried employees will have to give finishing touches to their tax planning and ensure that they do not end up buying a financial product that is not beneficial in the long run. In the next three months, insurance companies will go on an overdrive with new tax-saving products, which apart from saving some taxes, may not serve the long-term protection needs of the policyholder.

So, before you rush to invest in an insurance product or purchase an equity-linked insurance scheme, ensure that the product you invest in suits your long-term needs and also takes care of any immediate liquidity needs. Ideally, your tax planning should start from April onwards, when the financial year begins. Those who go for tax-saving investments in the last quarter often blunder into products that may not be suitable for them. Apart from strained finances, the last-minute investor also stands to lose the interest he would have earned if he had started investing earlier.

Before you look at a new financial product, it is always prudent to look at the deductions you can get under various heads. Analyse your total income by adding up salary income, business income, capital gains, house property and other sources. Some of your expenses, for example, mediclaim premium payments (under Section 80D) and

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