Many people invested late on March 31 to lower their tax liability for the current fiscal year. In fact, most people frequently make these types of purchases at the last minute, only to discover afterward that some of their hastily chosen investments weren’t exactly right for their objectives. However, that need not apply to you. Your investments could be planned out throughout the year and in good time. The beginning of a new fiscal year, which begins on April 1, would be the ideal time to establish arrangements for your personal finances.
By estimating your yearly income and being aware of your assets and responsibilities, you may start organising your money. After acquiring all of this data, you would examine your financial situation. You may determine how much money you need to consume, invest, and save using this technique.
General Advice for Organizing Your Finances
Everybody has their own methods for getting things organized; some are more methodical while others like disorder. Think about how you organize other elements of your life and what is effective for you. You can use these strategies when attempting to organize your funds.
What should be organized, as well as ideas for how to organize it, are provided below. However, using your unique methods and experiences will help you succeed the greatest.
Financial And Retirement Goals
Assess your financial and retirement goals first. Then, make investments toward your goals in line with your time horizon and risk tolerance. You can pick between debt and/or equity investments based on these two criteria. You can decide to invest in equities shares or equity mutual funds if you have a high-risk tolerance and a lengthy time horizon for your investments.
“By deducting up to Rs 1.5 lakh from your entire income, you can invest in equity-linked savings plans (ELSS), which have a three-year lock-in period and save on taxes. For retirement, you could also put money into the National Pension System (NPS) and the Voluntary Provident Fund (VPF). NPS enables you to modify the risk in accordance with your level of risk tolerance. You may also calculate their annual expenses and determine whether making such investments will enable you to reduce your tax burden, advises Archit Gupta, founder, and CEO of the tax portal Cleartax.
You may deduct up to Rs 2 lakh of the interest paid on a home loan if you are servicing one. Under Section 80C of the Income-tax Act of 1961, the principal amount returned is also eligible for a deduction of up to Rs 1.5 lakh.
Tax Regime
Choose the tax system that is best for you. The choice between the existing and new tax systems is available to taxpayers. Taxpayers are able to pay taxes at a lower slab rate under the new tax system, but they must sacrifice about 70 deductions that were previously permitted.
“Choosing the tax regime at the beginning of the year rather than when the income tax return is due aids in better tax planning. The taxpayer can assess the amount of income tax due under the selected tax system and adhere to all income tax requirements, including disclosing investments to the employer and paying any upcoming tax obligations in advance. According to Gupta, “If the employee decides to opt for the new tax regime, he or she may not invest in income tax-saving tools but may instead choose other investment possibilities.
Submit Tax Declarations
For a smaller tax deduction, submit your tax declarations on time. If your total income is less than the basic exemption limit and you get interest income from bank deposits, you can file Form 15G or Form 15H for no tax deducted at source (TDS). For a smaller or no TDS deduction, other taxpayers might file Form 13 to the tax authorities.
You won’t be able to disclose your investments to your employer if you don’t plan ahead. Take the time to learn about the investments you must make in this fiscal year if you are unfamiliar with the various financial instruments.
Start your new financial year with a plan. Get organized and take control of your finances so you can focus on what matters most.
