Don’t delay your tax-saving investments

''In this world nothing is certain but death and taxes,'' quipped American statesman Benjamin Franklin more than two centuries ago.

 Now we are into March, and soon the financial year 2011-12 will come to a close. Many among you would have, of course, completed your tax planning for the year and are no doubt feeling relieved - though how prudently it has been done may be debatable. But there would still be quite a few who are yet to put the finishing touches to this annual ritual.

Everyone loves to hate taxation; but there is no escape from it. In fact the more you delay filing returns the more painful it gets. Investments that enable you to save tax are long-term in nature, often running into decades; so a wrong choice is going to hurt you for many years.

Even if you make the right choice, the timing of your investment could make a big difference. Suppose you decide to invest Rs50,000 in PPF (Public Provident Fund) every year to save tax. If you make this investment at the end in March every year, you would get back Rs13.57 lakh after 15 years (assuming a return of 8 per cent a year). But if the same investment is made at the beginning of the year in April, you will end up with Rs14.66 lakh - a gain of more than Rs1 lakh.

This shows why it makes sense to begin tax planning in April itself and not wait till the next March, when the axe is about to fall. So this is the first lesson for the habitual late returns filers - tax planning must be concluded in April itself.

Here are a few helpful tips:
For the current year, don't fall for attractive advertisements for tax-saving investments or the persuasive sales pitch of agents. It should always be other way round - you should identify investments that are suitable for your financial profile and then check whether you can also save some tax in the bargain.