Every year, corporate employees go through the struggle of filling in investment plans for their employers. People do not take them seriously at all, at their own peril. These plans are helpful tools for you to manage how your investments in the coming year will shape up. So, before you declare your investment plan, here are five things you must consider:

Track Pre-Existing Investments

You should know all the commitments you have already made as far as investments go. There are a few things that should be on this list such as your health insurance premiums, PPF premiums, loan payments, etc. Wherever you are obligated to either pay money, or have already money tied up, you need to know them before deciding on any future investment plans.

What Can You Afford?

You should also have an idea about what you want to accomplish with your investments in FY19 before declaring your investment plan. The reason being, this will give you clarity as far as what types of options you have.

Declaring investments in instruments you cannot afford is a costly mistake. To ensure that does not happen, you also need to know your actual taxable income. To do that you need to be aware of all the tax deductions you will be getting under section 80C and which tax slab you will fall under. The amount you are left with is your investable income will give you a clear idea of what you can and cannot afford in FY19.

What Are Tax Deductions?

Tax deductions can be claimed on many things such as loan payments on your house, philanthropical donations, fees in schools, etc. Knowing these beforehand helps in calculating your actual taxable income based on which you will be able to declare an investment plan. If you have any payments that can be claimed as tax deductible, you should have a list of them.

Do Your Investments Need to be the same as your Declaration?

There is a possibility that your investments might not be the same as the one you have declared. However, that does not make you ineligible for tax benefits. For instance, if you mention that your investment will be in Fixed Deposits, but you end up investing in mutual funds then it is not a challenge for tax exemption. You need to submit the proof of investment in the respective investment vehicles and the employer accounts these investments to calculate your tax liabilities.

With the 2018 budget, there have been some modifications made to how much interest can be declared as tax exempt. Owing to this, some companies like Bajaj Finance are offering pre-approved offers with high FD interest rates which can be perused on their website. They also provide a handy FD calculator which allows you to know exactly how much you need to invest and how much return you can look forward to.

Which Information Belongs in Which Section?

This is a big problem when filling up investment plans as there are several sections to be filled with pertinent information. If you miss any section or wrongly enter the information in a different section, it could cost you later on.
For example, information about your home loans would go under the 24th section while your repayment information will go to 80C. Your NPS will be accounted for in the 1B sub-section of 80CCD.

These are just a few examples, but there is a lot of information required and you should have it handy so that you do not make any mistakes.

Last Tips

It is a rather laborious task, to fill up one’s annual investment plan, but it is very vital to your financial growth. All this legalese ensures that your investments are accounted for and fall under the right sections as sanctioned by the government. Some other things to keep in mind are also your goals for the FY19. What kind of investments are you looking for? Do you want short-term returns or long-term? Is it safer to invest in mutual funds or fixed deposits?
Also Read : Fixed deposits vs Mutual Funds