The advanced tax payment due on September 15 each year is a real signal for those who are assessed for income tax. As it is rightly observed as the only certainty on this planet after death, it is one?s preparedness to manage the tax liability effectively that can spare them from unwanted outcomes afterwards due to non-compliance to norms.

Many of you look at it only in the month of March, when salaries are reduced due to tax deduction or your tax guy comes calling if you are into a business. This is one for the prime reasons behind income tax payment being seen as a big inconvenience.

The advance tax payment that falls due on September 15 should be seen as a wake up call for all of us who are assessed for income tax, to check whether we are liable for advance tax. The process of planning income tax payment must start now if it has not already begun. The salaried people are asked to submit their investments that qualify for tax relief by December-end or early January and hence this is the right time to at least plan for the investment.

As the first step on this path, you should get down to the computation of income tax liability. For the salaried this is a much easier task, if your company issues the projections in your salary slip. If it is not the case then you have to compute it on your own.

Look at the income net of the professional tax and then ascertain in which tax slab you fall into. Once you have ascertained your tax-liability based on the gross income, you can look at the existing commitments you have on the investment front. This will typically include the salary deduction under the head of provident fund. Also, the premiums for renewal of your life insurance policies will fall in this category.

If you have taken a home loan, then approach your banker for a provisional tax certificate. The provisional tax certificate will help you ascertain the exact amount of interest and principal that will be paid to the bank when you pay the equated monthly instalments, throughout the financial year. Here you must note that if you intend to prepay your loan, your payment towards interest and principal change drastically. Hence if you intend to do so, then plan beforehand as the bankers take their time to issue the revised tax certificate.

Once you know the exact amount you need to invest, effectively plan your income tax and your existing commitments or the money already invested in qualifying investments, and ascertain the amount of money which you have to invest. Once you have this number withs you, you have to see how your portfolio looks like. If it is skewed towards a particular asset class and your risk profile is not in sync with the risk of your portfolio, this is the opportunity to rebalance your asset without distorting the existing portfolio.

Let?s understand this with an example. Say, if you are only 45% equity exposed and your ideal asset allocation stands at 60% equity, then you can channel your investments for tax-relief in avenues like ELSS that offers you an exposure to equity. You may consider investing into a ULIP with high allocation to equity. If your asset allocation needs to be enhanced on debt side, you may consider investing into avenues like postal schemes and public provident schemes.

However, if you are going to divest some fixed deposit and reinvest those funds, do ensure that the asset allocation that you have to consider will not only be the existing but also the one in future.

Once you arrive at the asset classes where you intend to park your funds then look at the available options within each asset class. Like any other investment, these are to be weighed on the parameters such as returns, liquidity and credit worthiness. In most cases the credit worthiness is good as most issuers are strong on this front. The minimum lock-in period here is three years and returns may vary depending on the riskiness of the asset.

In all other cases, the timing of the investment or the way investments are made matters little. However, if you are taking an equity plunge then, yes, the way you invest is something you must pay heed to. For the equity option in a ULIP and equity linked saving schemes (ELSS) in mutual funds consider the systematic investment plan (SIP). This will ensure that the risk with regard to timing will be mitigated. The minimum SIP entails 6 instalments. Hence if you start today you can very well work out your tax investments in ELSS over the next six months and get the full benefit in the current financial year.

Here you may also consider opting for a systematic switching plan. Most fund houses allow automatic switching of units from one scheme to another. You can invest all your money into ELSS, into a liquid fund and issue a standing instruction to the fund house to switch money from liquid fund to ELSS. This ensures that the money earns some rewards and you take systematic exposure to the risky asset class equity.

Simply put, start walking towards your goals. If you look at the ?disruption? caused by taxation an opportunity to revisit your game plan, then it will work for you and ensure a smoother ride for you.