Six Tasks For Making the Best Out of this Financial Year
Here are a few options that you should exercise for a well-balanced FY17
New Delhi: The craziness of March may be over, but investors and taxpayers still have a few more financial tasks to complete. They don’t take too much time or effort, but will certainly put your finances on an even keel for the rest of the year.
START TAX PLANNING RIGHT AWAY
Thismightseemalittlestrangegiven that the tax planning season has just ended. But experts say it is best to start tax planning at the very beginning of the financial year. If you plan to invest in equity-linked saving schemes (ELSS), it is best to start an SIP in April itself. Our research showsthatinvestorswhotooktheSIP route earned more than those who waited till March to invest in ELSS schemes.Staggeringtheinvestments across 12 months not only cushions you against volatility, but also lightenstheburdenattheendof thefinancial year. It’s easier to spare ₹ 2,5003,000 monthly instead of putting ₹ 30,000-36,000 at one go in March.
GET PAPERS READY FOR TAX FILING
The tax filing deadline is three months away, but it will help if you start putting together the information needed at the time of filing returns. If you have foreign assets or earned foreign income during the year, start collecting the documents right away. Obtaining tax credit receipts, income certificates and other documents from foreign countries should not be kept for later.
The tax department will scrutinise your interest income in greater detail this year. Add the total interest across all bank accounts. Also add the interest earned on infrastructure bonds, NSCs, fixed and recurring deposits and other fixed income securities. If you have a home loan or an education loan, get a certificate of interest from your lender to know how much deduction you can claim under Section 24 and Section 80E.
ORGANISE INVESTMENT PORTFOLIO
Prudent asset allocation is critical for success in investing. But many investors don’t know their asset al- location because all investments are not at one place. If you are among them, it’s time to start using a portfolio tracker. Value Research has made it simpler for its users. All they have to do is upload the consolidated mutual fund statement and NPS details, and all transactions get incorporated into the portfolio.
RAISE QUANTUM OF INVESTMENTS
This is the appraisal season and your next paycheque is likely to be fatter. This means you need to increase investments in the same proportion. Some investments, like your contribution to the Employee Provident Fund (EPF), automatically increase with rise in income. For others, you can either increase the existing SIP amount or start fresh SIPs in other funds. The idea is, if you are earning more, you should be saving more too. The government has cut interest rate on small savings schemes and there are indications that rates will go down further if the benchmark bond yield declines. However, the interest earned on EPF may not come down so much. So, instead of PPF which will give 8.1%, salaried individuals can consider the Voluntary Provident Fund (VPF). VPF contributions are eligible for tax deduction under Sec 80C and are tax free on withdrawal.
This is also the time to file Form 15G or 15H to avoid TDS on interest. Form 15G can be filed by investors below 60 who do not have any tax liability and whose total income from interest is below the basic exemption of ₹ 2.5 lakh. Form 15H is for individuals above 60 whose final tax on total income is nil.