Doing everything in the last-minute is a habit of many individuals. However, when it comes to making an investment for income tax saving, the last-minute efforts may prove costly.

Doing everything in the last-minute is a habit of many individuals. However, when it comes to making an investment for income tax saving, the last-minute efforts may prove costly. If you want to be a wise and relaxed taxpayer, April is arguably the best month when you should plan and start making the tax-saving investments. The biggest benefit you get by making the tax saving investment in the first month of the financial year is that your money earns interest for more months than what it may if you delay. There are some more compelling reasons why you should make the tax-saving investment in April, or at least in May.

First, it is wrong to think that tax-saving investments can wait as April is just the first month of the financial year. In this month itself, the company HR asks employees to submit proposed investments for the financial year. By the end of December or by mid-January, you are asked to submit all investment documents. If you fail to submit the documents, TDS is cut on the salary from February onward. You may get the TDS refunded by the tax department later on. However, the entire process may take 3 to 4 months during which you may feel the cash crunch. So, why wait for more months to do the tax-saving investment?

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Second, there is no incentive for delaying the tax-saving investment. Instead, people often end up taking wrong investment decisions in the last-minute bid to save tax. They also expose themselves to temporary cash shocks by making an investment towards the end of the financial year. Example: Suppose you make an investment in the ELSS or ULIP in the last month of the financial year. If any market crash happens anytime soon after you make the investment, the value of your money will go down, at least temporarily. This may not happen if you start making the investment from April itself.

Third, if someone doesn't save the tax money in time, it gets spent. The festival season starts from September/October. Plus there are trips and vacations towards the end of the year. So, saving money for investment becomes difficult in later months if someone fails to do it in the early months of the financial year.

Fourth, at the beginning of the financial year, many employees also get salary appraisals and annual incentives. Many waste this money because of lack of planning or financial intelligence. If you have received a performance bonus, you should make a tax-saving investment with the amount.

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Fifth, people often think they don't have enough money for making the tax-saving investments. Under Section 80C, you can save tax on investment up to Rs 1.5 lakh in certain instruments. Of course, you may not have this much amount to invest in one go. However, divide this with 12 and it becomes just Rs 12,500 a month. You can invest this amount in several instruments. You can also claim deduction up to Rs 25,000 (Rs 50,000 for senior citizens) for medical insurance premium under Section 80D, Rs 50,000 on home loan interest under Section 80EE and an additional Rs 50,000 in the NPS (Tier 1) account under section 80 CCD (1B).