LET’S START AT THE VERY BE­GIN­NING

Sort­ing your taxes, in­vest­ments at the start of the fi­nan­cial year will save you grief later

India Today - - SMART MONEY - By Renu Ya­dav

There are some te­dious mon­e­tary tasks best dealt with at the be­gin­ning of the fi­nan­cial year. Plan­ning your tax-sav­ing in­vest­ments for the year should be at or close to the top of the list. Mak­ing a lump-sum in­vest­ment in the last month of the fi­nan­cial year will bur­den your cash flows for the month. Also, if you are in­vest­ing in tax-sav­ing mu­tual funds, it is ad­vis­able to spread out your in­vest­ments to avoid hav­ing to time the mar­ket. If the public prov­i­dent fund (PPF) is your go-to tax sav­ing in­stru­ment, in­vest­ing at the start of the fi­nan­cial year earns you a higher in­ter­est.

Banks deduct TDS (tax at source) on the in­ter­est earned on fixed de­posits as well as re­cur­ring de­posits if the in­ter­est is over Rs 10,000 a year. So, if you don’t fall in the tax­able limit, you will have to sub­mit Form 15G/15H mak­ing a dec­la­ra­tion that your tax­able in­come for the year is nil, and sub­mit it to the bank to avoid TDS. These dec­la­ra­tions are el­i­gi­ble for a year, so you have to sub­mit them at the be­gin­ning. Form 15H is for those who are 60-plus while 15G is for younger as­sessees.

Tax fil­ing sea­son will start soon. A num­ber of doc­u­ments will be needed, like in­vest­ment proofs, Form 16 from your em­ployer show­ing the tax de­ducted, etc. Also, you’ll need to check the 26AS (con­sol­i­dated tax state­ment), which shows the tax de­ducted against your PAN (per­ma­nent ac­count num­ber) to see there’s no mis­match. You have to re­port all your in­ter­est in­come in your returns though it is ex­empt from tax up to Rs 10,000. So you will need to col­late bank ac­count state­ments. Also, you have to link your PAN to all your sav­ings bank ac­counts by June this year. You will also have to link your Aad­haar with your PAN if you want to file returns (the rule comes into ef­fect from July 1). For this, you will have to reg­is­ter on the In­come Tax of In­dia web­site.

It is said that when in­vest­ing in eq­ui­ties, in­vest and for­get is the right strat­egy. That said, you should be re­view­ing your port­fo­lio at least once a year. If you in­vest in mu­tual funds or stocks, you need to re­place un­der-per­form­ing ones. You also need to get eq­uity and debt ex­po­sure right. If you have set spe­cific fi­nan­cial goals for the short and long term, you will need to re­view them to check if your in­vest­ments are on track or not.

Lastly, you need to re­view your life in­surance cover as per the change in your li­a­bil­i­ties. Buy­ing in­surance is not a one-time ac­tiv­ity. The life in­surance cover should be enough to take care of the loans and ad­vances you have taken, goals such as child ed­u­ca­tion, wed­dings and to pro­vide your de­pen­dents a monthly in­come af­ter you. There­fore, re­view your as­sets and li­a­bil­i­ties and in­crease the in­surance cover as per your needs.

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