Why January Is Important Month for Tax saving - HDFC Life

The taxation system in India is an extensive platform for revenue generation and the rules and regulations in place are very elaborate. Taxation forms the backbone of the economy and acts as the primary source of revenue generation for the country. In India, both-the Central as well as State governments levy taxes with constitutionally defined duties and assigned roles. While the State governments are responsible for collection of agricultural taxes, state excise, VAT (Value Added Tax) etc. the Central government is responsible for collection of Income Tax, Customs duty, Goods and Services Tax, etc. In India, taxes are broadly defined into two categories direct and indirect. Direct taxes are the taxes that are liable to be paid directly by the individuals, HUFs (Hindu Undivided Families), commercial and corporate bodies etc. These taxes are therefore, paid directly to the government by the mentioned entities and include income tax, corporation tax, wealth tax etc. The governing body for direct taxation in India is the CBDT (Central Board of Direct Taxes).

January being the first month of the year is the exact beginning point of all financial transactions that are then carried forward into the year. It is like a fresh beginning for financial-resource building and the reserves that you intend to create for meeting the expectations. Starting from the beginning of the year will give you a leverage that can be consolidated further as you head on to the details of the monetary planning. This includes the important part of tax-savings as well. Any investment choice or a decision that you take assumes significant implications only when there are tax-saving strategies in place. This is why taking a timely decision is very important so that the factor of time stays in your favour and you can avoid last minute tax-related hassles.

There are several advantages of early investments that you make in the beginning of the year:

1. There are a lot of options available in the market where you can invest your money and choose the right kind of tax saving vehicle for building up your financial corpus. You could save more taxes from investments like mutual funds or ULIPs and reap additional benefits on the returns on your investment.
2. Sections 80C and 10D of the Income Tax Act define and enlist the tax benefits on payable premiums and the earnest returns on your investment, respectively. Therefore, you get to choose viable options like investing in ELSS or Equity-Linked Savings Scheme, which is a mutual fund that gives you tax-benefits. In the process of investment, you get to avoid loads of paperwork or unwanted documentation, if you start early in the year.
3. Starting early makes you reap the benefits of SIP or Systematic Investment Plan, thereby guaranteeing that regular and nominal amounts are set aside for the investment purposes and that in case of non-availability of funds, there is no requirement of any lump-sum payments as such.

HDFC Life presents various saving and investment plans that offer multiple avenues to help you save and grow your money. For more details, click on the mentioned link: https://www.hdfclife.com/savings-plans