Most of us with passing years make resolution to plan taxes before hand but eventually end up at the last moment. It may also happen that you realize that other investment option was better and would have helped you save more. At least, it is important to consider these points before tax planning.
Review your goals
With each year, goals tend to change with your financial commitments and responsibility. Following a 3 year old financial goal does not make sense if your commitments have changed or increased.
After reviewing, one needs to plan investment accordingly so that your tax planning is not hurt.
2) Income Changes
Year on Year income is expected increase such as a hike or bonus. Check with your spouse and plan your tax so that you can avail maximum benefits from the extra amount your earned or else you will end up paying tax and reduce your income.
Insurance plays a vital role while planning taxes as you can avail benefit under 80C as you will be eligible for tax deductions on the premiums of your life insurance plans.
You can get a tax benefit if you are paying the insurance premium for your spouse. But no deductions are available for premiums paid for parents or children.
4) Track Investments
Before Investing consider in which tax bracket you fall and plan accordingly. it is not advised to invest all the amount in only one avenue.
Children's school fees, repayment against housing loans, PF deduction, and insurance policy premium are some of the investments that are also eligible for deductions.
5) Consider Exempted Incomes
Under the Income Tax law, there are few option whose income are exempted from tax such as interest income from tax-free bonds and any income from agriculture are some items of exempted incomes.