It's about to start a new Financial year and we usually start the new year with new goals and resolutions, then why not to plan for TAX saving. Although, tax planning should ideally be done at the beginning of the financial year, in the month of April, you have one more month in hand to plan and break your investments over the year, yet many of us have still not kicked off the tax planning process. So, without wasting any more time, you must immediately get on to your Taxes.

Calculate your Tax Liability: Since there is already a time crunch, the plan must be a sure-fire to avoid making mistakes later. Hence, begin with estimating your annual income, you already have nine months' numbers with you, so you are left with just three months' to judge. Remember to include:

• Any Annual Bonus that you are expecting,

• Any Capital Gains or Losses through redemption of earlier investments or any imminent sale of assets

• Interest incomes from fixed deposits or for that matter, from saving accounts also

• Dividend Incomes, etc.

Expenses: Once you are through with the Income, try to cut it down by deducting the expenses eligible for deduction. Most people start investing in PPF's and NSC's randomly on the basis of their annual income. But you don't need to always invest to save taxes. There are certain expenses which you have already paid for, and which can help you bring down your tax liability. The money you save by not investing can be directed to products which are more suitable for you, since then you won't be limited by Section 80C. So, if you have spent on or are about to spend on any of the following from April 2020 until March 2021, then they should be deducted from your gross taxable income:

• Tuition Fee of your Children : The tuition fee paid by you for your children to any registered school, college, university or any other educational institution based in India, for full time studies, is eligible for deduction under Section 80C of the IT Act. Remember, this deduction is eligible for fee paid for upto 2 children.

• Rent Paid : If you are living in a rented accommodation, the rent paid by you to the landlord, is eligible for deduction. Salaried individuals can claim HRA exemption provided by their employers, while business owners or salaried people who do not get HRA exemption, shall claim the rent paid under Section 80GG of the Income Tax Act.

• Medical Insurance : Your health insurance premiums can also be claimed as a deduction u/s 80D of the Income Tax Act.

• Home Loan Principal and Interest : If you are paying your Home Loan EMI's, then both the principal repayment as well as the interest paid, are separately eligible for deduction. The principal repayment can be claimed under Section 80C for upto Rs 150,000 and the interest component can be claimed under Section 24, for upto Rs 2 Lakhs.

• Payments made for purchase of a Residential property : In addition to Home Loan installments, if you have acquired a house or a land in FY 2020-21, then the payments made at the time of acquisition like the stamp duty, registration fee, etc., are also eligible for deduction.

Apart from these, there are a number of expenses that you can claim as a deduction from your income, like Interest paid on education loans, donations paid, deductions available to disabled people, etc.

Assess the investment amount : Once you are through with the expenses part, and are at the income post deductions, the next step is to assess the amount you need to invest. If your Sec 80C limit isn't yet exhausted after providing for the tuition fee or home loan principal, Life insurance policy premiums, etc., if any, now you need to fill in the gap with investments.

Asset Allocation : Your tax investments are not just a tool to save tax. They are a part of your overall financial plan of achieving long term goals. Therefore, these investments must follow your ideal asset allocation, they must be linked to a goal, and shouldn't be treated as a random mandatory investment created just to save tax.

ELSS Schemes for Saving Taxes and Wealth Creation : While most of us have been investing in PPF's, Tax Saver FD's, Traditional life insurance policies, etc., since ages. But these products have a number of shortcomings, like the interest rates are gradually becoming exceptionally low, there are high lock in periods and the returns are taxable, except in PPF. So in this scenario, investors must consider ELSS schemes of Mutual Funds, these are eligible for deduction under section 80C, with the minimum lock in of 3 years, the returns generated are way higher than all other conventional products, and that too tax free.

You must at once, sit with your advisor, who can guide you with the various investment options and the ones which are most suitable for you. So, once you are through with the plan, it's time for action. Start investing and also accumulating the receipts for all of the above expenses paid and the investments that you are going to do to avoid the last minute hassles.