Why January Is Important Month for Tax Saving?

Are you looking for tax-savings options to begin this New Year? Because investment tools not only help you decrease your taxable income but also aid in long-term wealth creation. With tax provisions and government schemes, start this year with the habit of investing and secure your future. Here are some benefits of early investments.

Why Is the Month of January Important for Tax?

The first month of the year is when most make their resolutions to follow certain diet-plans or career directions. But for many it also the time to start saving up and which other method is better than investing. If you are a working professional, you must be filing your taxes and trying to find ways to reduce your taxable income. With less than three months in your hand, your tax-savings investment has to at least begin now to benefit you during ITR. So let’s look at the benefits of investing right at the beginning of the year:

Benefits of Early Investments in Your Life

You may have spent the year without investing in any financial tools but never say never. There is no harm in starting the year by investing your income in tax-saving options. Here are some advantages of investing early in the year before you file your Income Tax Returns:

1.     Numerous Tax-Savings Options

Though saving money can be tough, you cannot say the same about investing. With numerous investment options available, you are able to find the one which fits your budget. With alternatives for short and long term plans, you can also select the financial instrument based on your risk appetite. The dual nature of saving on taxes and wealth creation is bound to make your year a fruitful one. Here are a few eligible investment options for saving taxes:

  1. Life Insurance
  2. Fixed Deposit
  3. Public Provident Fund (PPF)
  4. Employee Provident Fund (EPF)
  5. Equity-Linked Savings Scheme (ELSS)
  6. National Pension Scheme (NPS)

2.     Tax Benefits

Under Section 80C and Section 10(10D), you are enabled to claim tax deductions for eligible tax-savings investment modes. You can opt for one of the options which allow deductions under these tax provisions. Also, early investments will help you figure out the exact amount you need to claim for ITR.

3.     Filing Your Income Tax Returns

You should always file your ITR before the deadline approaches. Many end up doing at the last minute which results in mistakes. Taxpayers should also have the relevant documents ready to make the entire process smoother without any errors.

Author: Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.