A Financial planner Help you in Tax planning

A Financial planner Help you in Tax planning


Tax Planning: Introduction

Tax Planning is a process by which an individual or organization come to know his financial profile, with keeping the aim of minimizing the amount of taxes paid on income.

Tax planning is an essential part of the entire financial planning process. Your financial planner/ advisor can help you in efficient tax planning. He can not only postpone taxes, but can also help you avoid tax, funding your goals along the way! This saved amount can be efficiently utilized to invest or just to spend!

Why Financial Planner For Tax Planning?

Since not many of us are pro in tax planning as well as financial planning, Certified Financial Planner is best person you can go for your efficient money planning.

A FINANCIAL PLANNER is an investment expert who guides individuals to achieve his long-term financial goals by analyzing the client’s status and making an effective financial plan to help the client meet those goals. Wealthcare Securities Pvt Ltd is a Financial planning Company who have qualified Certified Financial planner team who will Guide you regarding Tax planning, Mutual Funds, Systematic Investment plan, long-term Saving plan etc

In other words, a financial planner is a person who helps individuals set and achieve their long-term financial goals, through investments, tax planning, asset allocation, risk management, retirement planning, and estate planning. Wealthcare provides best Financial Planning Services in India you can take any Suggestion Regarding Financial planning.

Equity Linked Saving Schemes (ELSS):-

ELSS is schemes of mutual funds; it is diversified equity mutual funds which have a majority of the corpus invested in equities. ELSS has a lock-in period of 3 years. So you need to know about lock-in period of your SIP, This means if you have started a SIP (Systematic Investment Plan) in an ELSS, then each of your investments will be locked in for 3 years from the respective investment date.

Tax Planning: Decode the Tax Structure

ELSS schemes returns were tax-free till 2017-18. Now with the change in the Budget, 10%  capital gain tax has been levied. However, one may claim exemption up to Rs. 1, 00,000 per annum. Now the role financial planner is more important. He needs to harvest Rs. 1, 00, 000 capital gain every year as it is not allowed to carry forward the exemption. One can claim up to 1.5 lakh of his investment as a deduction from his gross total income in a particular financial year under section 80C of income tax act.

Usually, ELSS is called “1st mutual fund scheme” because of most of the investors get into Mutual Funds via ELSS or tax saving schemes. With the help of  ELSS, you can deduct tax up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. Initially, most of the investors start to invest in ELSS to save taxes, & gradually they start to invest in other schemes.

Other Tax Saving Options: Why ELSS is a better bet?

In any case, if you’re not investing in ELSS then you should reconsider & should invest in ELSS rather go for traditional tax saving options. i.e., PPF (Public Provident Fund) & NSC (National Saving Certificate).

  1. ELSSs have shortest lock-in period among the tax saving options available under Sec. 80C. There are other options like PPF & NSC have a much longer lock-in period. Though PPF allows partial withdrawal after five years, it is a product with tenure of 15 years. NSC has a lock-in period of six years.
  2. ELSSs are riskier than government-sponsored schemes. This is because ELSSs invest in stocks & stocks are risky & volatile in short-term. That’s why it is important to invest with a longer tenure than the mandatory three-year lock-in period. As ELSSs are equity schemes, an investor should be prepared to stay invested for at least 5-7 years
  3. However, ELSS also rewards investors for the extra risk. For example, ELSS category has offered tax-free returns of around 13.5% in 3 years, 17.3% in 5 years & 9.8% in the 10-year horizon. Other government-backed schemes offer single-digit returns.

     How do Tax Saving Mutual Funds work

    When an investor invests their money in mutual funds, the funds are added to the pool. The funds are then invested in the equity markets in such a way that even if one investment incurs losses, the other investment managers to mitigate the loss. For example, the breakup of invest in a particular fund may look like:

    1. Automotive industry 6.56%
    2. Banks 17.56%
    3. Consumer durables 5.34%
    4. Consumer non-durables 5.66%
    5. Power 5.92%
    6. Software 8.93%
    7. Pharmaceuticals 9.99%

    For more information & watch the related video, click below link:-


     Advantages of ELSS over other tax saving instruments:-

    • The first and most obvious benefit is that the investments are eligible for tax benefits up to Rs. 1.5 lakh.
    • Compared to traditional tax saving instruments like Public Provident Fund (PPF), National Savings Certificate (NSC) and bank Fixed Deposits (FDs) with ELSS has a lower lock-in period.
    Lock-In 3 Year 15 Year 6 Year 5 Year
    • The second benefit is that long-term capital gains are not taxed till 2017-18. Now with the change in the Budget 10%, the capital gain tax has been levied.

    • An investment in these funds means that you plan for future expenses like buying a car or paying the down payment for a house.

    • These plans allow investors to invest on a monthly basis via a SIP (Systematic Investment Plan) thereby negating the need to invest in huge amount.

    • The funds are not invested in one place; the portfolios are kept diverse so as to minimize the risk of massive losses.

    • If you choose not to withdraw the investment, it will continue to grow and turn into savings for a rainy day.

    • While you may not be able to withdraw the principal, you can withdraw the tax-free dividends earned, even during the lock-in period. This may also solve cash flow problems of few investors.

    Key points to remember while investing in ELSS:-

    Remember before investing in ELSS, one should do thorough research before investing in an ELSS fund & remember some key points:

    1. Consult your Financial Advisor.
    2. Fund Manager’s investment approach.
    3. Portfolio of the funds to check what kind of risk fund is taking.
    4. Expense Ratio of the fund.
    5. The volatility of the fund.


    As per our calculation, if you have invested Rs. 1 lakh annually in a Tax Saver Fund since 1996 then your investment value will be 650 lakh in March 2017, rather in the same time if you have started to invest the same amount from same year in PPF, your investment value will be around 60 lakhs. One more thing, the interest rate in PPF is decreasing gradually.

    Investment amount Rs. 1 lakh annually since 1996.
    Year PPF                             HDFC Tax Saver Fund
    1996-2017 60,00,000/-                                  6,50,00,000/-

    Note:  Mutual fund investments are subject to market risks. Please read the offer document carefully before investing. Past performance may or may not be sustained in future.      

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