10 Dec, 2012

How to get ahead in tax planning for FY 2012-2013?

Uncategorized

With the New Year just around the corner, it’s the time to get thinking about the tax planning for the fiscal that will end on March 31. We know tax planning is a boring and time consuming process but it forms an important part of your financial planning. Efficient tax planning helps in reducing the tax liabilities to the minimum. But on the other hand if not planned correctly, it can lead to incorrect investment decisions. You can plan the tax saving in such a way that it can align with your goals, return expectations and risk factors.

Before we go ahead there are certain facts about tax planning that you need to know-

 

Tax planning is not tax evasion. It is the sensible planning of finances and investments.

 

Tax planning is not just about investing your money in any 80C investments.

 

Tax planning is not cumbersome. It is a very easy task and can be easily practiced by an average person.

 

Following information is important for you to plan tax savings for financial year 2012-13andAssessment year 2013-14:

 

Tax Slabs

 

1) For General (Both Male & Female):

Income Bracket

Rate

0 to Rs. 2,00,000

0 %

Rs. 2,00,001 to Rs. 5,00,000

10 %

Rs. 5,00,001 to Rs. 10,00,000

20 %

Above Rs. 10,00,000

30 %

 

2) In Case of Senior Citizens (Age above 60 years but below 80 years):

Income Bracket

Rate

0 to Rs. 2,50,000

0 %

Rs. 2,50,001 to Rs. 5,00,000

10 %

Rs. 5,00,001 to Rs. 10,00,000

20 %

Above Rs. 10,00,000

30 %

 

3) In Case of Very Senior Citizens (Age above 80 years):

Income Bracket

Rate

0 to Rs. 5,00,000

0 %

Rs. 5,00,001 to Rs. 10,00,000

20 %

Above Rs. 10,00,000

30 %

 

Planning Taxes for FY 2012-13

 

For planning taxes for this year, you need to understand what your goals are and how can you maximize your tax efficiency to achieve those goals. Tax planning should be a part of your overall financial planning. And it is advisable that you plan your taxes in advance. Many tax payers start planning their taxes during the months January-February-March. But if you start planning your taxes from the starting of fiscal year your investments will fetch you extra interest. Starting investing early also means that you’ll have fewer burdens during the end of fiscal year. Your early investments in shares and bonds would also qualify as long-term investments.

 

Often when you plan during the end of fiscal year, you tend to invest money with the first agent you meet. Do not just blindly invest money as you might end up making mistakes. Many of us end up buying insurance policies with minimal insurance coverage or where we don’t have access to money when we need it. It is important that you carry out extensive research before investing your hard earned money.

 

Never make last minute decision just because your accounts department has reminded you that the final deadline to submit proofs is coming near. Tax planning is a process which needs commitment and planning in advance. With the last minute rush, you can end up making serious goof ups in your financial investments.

 

 

Tax Saving Investments Criteria

You should consider the following points before selecting your tax saving investments this year-

 

Tax Exemption – All tax saving investments under 80C differ from each other. So, it is important that you invest wisely.

 

Risk and Return – Your saving investments depends upon how much risk do you want to take. The investments with low risk mostly give low returns.

 

Cash inflow- Your investments depends highly upon – how quickly you’ll need the money? In all the tax saving investments there is a money lock of minimum 3 years.

 

The earlier you recognize the right approach for tax planning, the better it is! If you are looking for a certified investment advisor to assist you in right tax planning then you can contact and get the best investment advice.

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