In this world, nothing can be said to be certain, except death and taxes – Benjamin Franklin
While Tax is as certain as death, a timely and suitable tax planing could help in saving taxes. Most people remember about tax planning when the payroll department asks for their investment proof. The best time to plan tax saving investment is start of the financial year and that is in April every year. In this article, we discuss various options to save taxes.
The first question to ask is on what basis a tax saving option should be chosen. While deciding on a tax saving investment, it is better to evaluate the available option on the basis of:
- Liquidity: How easy is to withdraw the money and if there is any lock-in period during which invested money can’t be withdrawn easily?
- Transparency: What’s the cost and pros and cons of the product?
- Risk and post-tax return: You don’t need to invest in a product just to derive the tax benefit. You need to think if the return is commensurate with risk and holding period of product. Longer the lock-in period, higher should be the return.
In the below video, we present an analysis of tax saving investment options. In our view, most people should choose equity linked mutual funds for tax saving investments. These mutual funds are flexible, transparent, have smaller lock-in period and offer the best post-tax return.
Below is simple summary of the tax saving options:
The above content is just for information and should not be construed as an offer to buy or sell or recommendation. Contact your financial advisor for guidance on any investment related query.
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