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Valueraj Associates Private Limited

Personal Associates for your Personal Finances

Tax Planning

Tax Planning

What is Tax Planning?

As you know, in this world, nothing is certain except death and taxes. As a good citizen, you have to abide by the tax laws of the land. As a hard-working person, it is not how much income you earn that matters, but what you get after taxes. Income taxes, if not planned well, can take away a major portion of your income. Similarly, as an investor, you must understand the difference between pre-tax returns and post-tax returns. Most of the times, you are lured by higher returns on an investment but you do not realize the impact of capital gains tax on profit from it and income tax on any dividend or interest income from it.

You may already be buying insurance or investing in instruments with the sole objective of saving taxes. Tax Planning is more than that. It is about minimizing taxes through tax-saving instruments and also making sure that those instruments are suitable to meet your financial goals. In fact, meeting goals becomes primary objective and saving taxes becomes secondary objective.

Tax Planning is in fact a part of Financial Planning. It is a process, not a product. This process involves (a) collect the data about your income from all sources (b) analyze the data for taxable and tax-exempt incomes (c) account for existing tax saving instruments towards deductions and rebates (d) calculate the possible amount to invest in tax-saving instruments and assign them to financial goals.

The outcome of Tax Planning process is a ‘Tax Plan’ document. This document spells out the details on tax saving instruments you must buy to comply with your taxes. If you follow it, you are availing all the tax incentives provided by the government to meet your financial goals.

Why should you have a Tax Plan?

Tax Plan makes sure that you are not overpaying to the government in taxes. A few but not all benefits are:

  • You will exactly know what are the existing tax saving instruments you have and how they can be used to meet your financial goals.

  • You will know whether you are availing all possible exemptions, deductions, rebates and allowances.

  • You will know whether your current investments are tax efficient or not. If not efficient, what are the possible substitutes that are efficient.

  • You will know what are the tax saving instruments that are suitable to you in terms of liquidity, safety, returns and goals.

  • You will know that you are complying with the latest tax laws of the land as they keep changing year to year.

What Tax Planning is not?

Here are few things that Tax Planning is not:

  • Tax Planning is not about avoiding taxes. It is about minimizing the taxes by maximum use of provisions available in Tax Laws.

  • Tax Planning is not about saving taxes at any cost. Sometimes, it is better to pay taxes than invest in low-return, long-locked instruments.

  • Tax Planning is not just putting your money blindly into any tax saving schemes or insurance policies.

  • Tax Planning is not for the people who rush in the last month to save taxes.

How can we help you?

We are Certified Financial Planners by qualification and Mutual Fund Distributors by profession. We provide ‘Tax Planning’ service to individuals and families. However, we provide this service only as incidental to distribution of Mutual Funds as taxation is holistic to personal finances including MF Investments.

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