That’s a question which comes up in every taxpayer’s mind while planning your taxes every year. We want to pay less taxes to the government and save as much money as we can. We’re all about saving money on taxes. But not all tax-saving strategies are beneficial. Investment can reduce your tax liability but that doesn’t mean every tax-saving decision is correct for you.

Many people do investment that saves taxes in short term but it costs them more in the long run.

People invest in those instruments which have lock in period of 5 years or more. They don’t think for liquidity at that time. In the end they get returns which can’t even beat inflation rate. So, the strategy of investment without thinking of liquidity & returns is fire backed in long term.

People treats insurance products as investment tool & end up buying as many insurance products as they can. Insurance covers only risk. It is a risk covering tool whereas investment is a separate chapter. Don’t choose a bad insurance product just to avoid taxes

People end up buying homes through home loans & end up paying EMI’s which is more than the taxes saved & the value of property.

Conclusion: While planning your taxes you should take care of following things:

  • Liquidity Factor,
  • Returns on investment,
  • Inflation Rate,
  • Need of investment in long run,
  • Retirement &
  • Efficient Tax Planning.

Investment can’t be made just to reduce your taxes. Reducing taxes should not be the only criteria for Investments. Before making investment visit  Tax Planning Advisor to plan your taxes efficiently.