For most of us, tax planning comes as an after-thought, but it should not be that way. If you have paid all your taxes, maintain the momentum and keep yourself organised next year too.
It is that time of the year when people are busy filing their tax returns. While some would be well-prepared with their investments, there are many who may not have planned it. Whatever be the case, one must understand that investments should be made throughout the year.
For most of us, tax planning comes as an after-thought, but it should not be that way. If you have paid all your taxes, maintain the momentum and keep yourself organised next year too. Planning things in advance has its own advantages, or else it will be the same old story — running around, trying to salvage tax breaks, investing into plans that may not be fit for you, nor in line with your financial goals.
Stay true to your plan
There is no secret recipe for success. Understanding your financial situations, setting goals and devising plans to achieve those goals are critical to secure a financial future. An extra principal payment every year on your mortgage could shed 7 years off your 30-year tenure. A Rs 500 accumulated every month over a period of 3 years can compound to 6 months of emergency savings. Once you have a plan in place, stick to it, monitor it and adapt with changing market conditions.
Review the plan
If you got a good refund last year, you must try adjust your taxes deducted at source (TDS). TDS is the tax your employer deducts from your salary. Inform your employer about your financial situations, so that the employer can deduct only those taxes you are liable for. The money, thus, saved can be invested to earn compounding returns. One must deploy all online resources available. There are software that can help plan your investments to achieve maximum tax breaks. One must also consult the accounts department in the office at least twice a year to understand withholdings.
Filing returns can be a tedious task at times. Taxes are summary of your annual earnings, the house you bought, job you took or new family member. As you go through these milestones, make sure you are prepared to take maximum tax benefits at the end of the year. There are a lot of online tools/apps available that will help you compile a list of documents needed based on your income situation.
From the current fiscal, income tax department has introduced Electronic Verification Code (EVC) that will make obsolete the need to send a signed paper copy of the ITR-V to Bengaluru. One can e-verify submission of returns via e-filing portal, net-banking or even ATMs.
Pick your choice
There are plenty of options online to e-file returns. If your case is not a complex one, there is no reason to spend on a chartered accountant. You can do it yourself, take control and e-file your returns online and without any hassle. A few things that you need to keep in mind while choosing service providers include cost, features and incentives. Most online service providers claim to offer self e-filing for free, which is not true, so make sure you do your due diligence.
The software must be simple so that one can do it without any external help. Compare the service providers, send them e-mails if there are questions, follow them on social media to see what others say about him, google them to see blogger reviews about these services.
The writer is founder of Quicko.com, an online tax preparation platform