Learn about the difference between Financial Planning and Tax Planning- Kotak Life
Close

Buy a Life Insurance Plan in a few clicks

Close

Now you can buy life insurance plan online.

Kotak e-Term Plan

Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

Kotak E-Invest

Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs. Know more

Kotak Health Shield

Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability. Know more

Kotak Lifetime Income Plan

Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime! Know more

Are Financial Planning and Tax Planning the Same Thing?

Are Financial Planning and Tax Planning the Same Thing?
  • 9th Mar 2021 |
  • 2,063

Tax planning and financial planning are two commonly used terms. Planning your taxes and finances support the fulfilment of your financial objectives. Thus, both can aid in selecting the most suitable investment option for your needs. However, there exists some difference between tax planning and financial planning. It is essential to understand this to make informed investment decisions.

How does a financial plan work?

You can plan your finances better by following the steps given below.

  • Defining your financial goals - This requires assessing your current financial position and listing the monetary goals to be achieved. Further, you may classify these goals into short-term, medium-term, and long-term.

  • Defining your financial goals - This requires assessing your current financial position and listing the monetary goals to be achieved. Further, you may classify these goals into short-term, medium-term, and long-term.
  • Implementing and reviewing - After selecting the right financial instruments as per your investment preferences, it is important to periodically review your portfolio. This aids in ensuring that the portfolio performance is in line with the planned strategies.

How does a tax plan work?

Tax planning involves assessing your investments from the viewpoint of taxation. It thus helps you in reducing your tax liability. A reduced tax burden can also contribute to your disposable income. You can make use of the tax saved towards making investments or meeting other necessary expenses. Tax planning consists of three types:

  • Purposive planning - This aims at availing the maximum benefits under the requisite sections of the Income Tax Act of 1961. These benefits include deduction from the gross total income and exemption of certain types of income.
  • Permissive planning - Under this approach, the tax planner plans within the framework of law by making use of the relevant provisions and clauses of tax benefits.

  • Short-range and long-range planning - Short-range plans are limited to a specific financial year. They include investing in a particular tax-saving instrument that can qualify for tax deductions. On the other hand, long-range plans have a wider scope. For example, transfer of an asset without consideration to a minor child requires the clubbing of income till the minor attains the age of majority, i.e. 18 years. Thereafter, it is treated as the child’s income.

Difference between tax planning and financial planning

Given below is a tabulation of the key points of differentiation between tax planning and financial planning.

Particulars Financial Plan Tax Plan
Professionals who can help Financial Advisor Tax Planner
Objective of planning To have sufficient funds for various purposes like purchasing real estate, covering the costs of higher education or children’s marriage, retirement planning, etc.
Moreover, saving tax can also be a part of financial planning. It aims to reduce your tax liability.
It aims to reduce your tax liability

Financial planning and tax planning with Kotak

Certain investment avenues aid dual planning benefits of tax and financial planning. For example, Kotak Life Insurance offers savings and investment options with multiple benefits. Here are some of the advantages

  • Life coverage that extends financial support to your family in your absence.
  • An investment component that offers non-linked or market-linked plans. This aids in creating a corpus for achieving your financial goals.
  • The premium amount is allowed as deductions subject to the compliance of Section 80C.
  • The maturity amount is tax-free on fulfilling the conditions of Section 10(10D). Besides, the death benefits are fully exempted from tax.

As you can see, buying an insurance plan benefits in financial as well as tax planning.

Kotak Guaranteed Savings Plan

Features

  • Enhanced Protection Through Riders
  • Life Cover
  • Tax Savings
  • Multiple Premium Payment Terms
  • @ Guaranteed Loyalty Additions
  • Accrued Guaranteed@ Additions

Ref. No. KLI/22-23/E-BB/490

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

How to File Income Tax Return - Everything You Need To Know

Tax Benefits of ULIP Plans Available for NRIs

Top 8 Tax-Saving Methods in India- Budget Planning

Why Tax Planning Should Be an All-year Round Activity

Income Tax Filing Using Multiple Form 16

How do I Calculate My Term Insurance Premium

All about TDS on Salary under Section 192 – Kotak Life

Types of Riders in Insurance Policy

What is Section 80CCC of the Income Tax Act 1961

Tax Saving for Self Employed in India

What is Tax Evasion and What Are The Penalties For Tax Evasion In India?

What are Direct Taxes? How to Avoid being Overtaxed?

Income Tax Filing For NRI in India

Tax Benefits for Startups in India

Tax Planning and Tax Benefits of Life Insurance

How to File TDS Return?

What is the Difference Direct Tax and Indirect Tax

Tax-Savings Investments and Options in India

Tax Saving Options for Salaried Employees

9 Tax Changes in Budget 2019 that may Impact Your Personal Financial Planning

Tax Season Is Coming- Know How to Save Tax

Pradhan Mantri Suraksha Bima Yojana

Income Tax Deductions & Exemptions under Sections 80C, 80D & 80DDB for FY 2020-21 & 2021-22

How to Save Tax on Salary Arrears?

Financial Planning and Best investment options for Housewives

Tax Saving Options other than Section 80C

Understanding Tax Exemptions in ULIP (Old and New)

What is House Rent Allowance and How is HRA Exemption Calculated?

How to View 26AS and Download Form 26AS Online?

What is Challan 280? How to Pay your Income Tax Online with Challan 280?

What is ITR 5 Form and How to File ITR 5?

Tax Exemption and Scope of Coverage

Income Tax Deductions for Disabled Person Under Section 80U

How to file Form 16 online?

What is Section 80C Deduction Limit?

E-Filing of Income Tax Returns in India

How to save tax for salaried person?

TDS Due Dates of FY 2020-21 For Return Filing

What is the Last ITR Filing Date and Penalty for Late Filing of ITR?

Guide for Tax Calculation on your Salary

Income Tax Benefits for Doctors

Section 16 of the Income Tax Act (ITA), 1961

Tax Saving Tips: Best Ways to Save Income Tax for 2021

What To Do If Your TDS Is Not Deposited With The Government?

What is the TDS Rate on Salary?

What is Section 80C - Explained in Detail

Income Tax Exemption for Disabled

List of Important Income Tax FAQs

What is Section 80C Deduction?

Tax Benefit of Investing in Term Plan

आयकर स्लैब 2021-2022

Section 80E: Tax Exemption on Interest on Education Loan

How Much Money This Budget 2019 Can Help You Save

Received an Income Tax Notice? Your Guide to Understanding Intimations under Section 143 (1)

When Should TDS be Deducted and Who is Liable to Deduct it?

How to Check Income Tax Refund Status Online in India

What are the Different Types of Taxes in India?

What is TDS Exemption Limit?

Tax-Free Income in India

Income Tax Slabs and Rates in India for FY 2021-22/AY 2022-23

Do Beneficiaries Pay Taxes on Life Insurance?

Income Tax Deduction Under Section 80CCC In India

Impact of GST on Life Insurance in India

Tips to plan your savings in 2019

Financial Benefits and Government Schemes Every Woman in India Should Know

5 Unusual Investments You Didn't Know for Saving Taxes in India

Section 80D - Medical and Health Insurance Tax Benefits Under Section 80D

How to File ITR Online

Sub-sections Under Section 80C of the Income Tax Act, 1961

How to Claim TDS Refund for Excess TDS Deduction

Why is Form 16 Important?

Home Investment Plan to Buy Dream Home

What is Tax Deduction at Source (TDS)?

How to Check Income Tax Returns Status Onine?

How to File Income Tax Return without Form 16

Things to Do After Filing Income Tax Returns

ITR-6: Guide to filing ITR-6 Form online

What is Form 16B?

Budget 2019: Impact on the Common Man in India

Income Tax Exemption for Physically Handicapped Dependent

Form 16, Form 16A, and Form 16B?

Penalty For Late Filing TDS Return

What is Section 195 of the Income Tax Act? TDS on Non-Residents of India

How to Pay Advance Tax Online in India

Everything You Need to Know About Tax Benefits of National Pension Scheme (NPS)

Have You Considered Term Insurance a Part of Your Tax Planning?

What is Form 26AS - All You Need To Know

Presumptive Taxation for Business and Profession

Income Tax Deductions Under Section 80C

Tax Saving Guide for 2019-20

How can I get Form 16B from traces?

What Is Advance Tax and How Is It Calculated?

What are the Tax Benefits of Sukanya Samriddhi Yojana (SSY)?

How to File Income Tax Return for First Time Tax Payers

What is Section 10D of the Income Tax Act?

The Difference Between Gross Income & Total Income in Calculating Income Tax

ITR 2 Form – Complete Guide

Insurance and Endowment: Everything You Need to Know!

How to File Form 10E for Tax Relief on Salary Arrears?

A Guide to Life Insurance Policy’s Tax Benefits and Taxability

How To Save Tax Using Life Insurance?

Can You Get Term Insurance Without Income Proof?

What is the Percentage of Tax Deducted at Source (TDS)?

What is ITR & How to File Income Tax Return

Problems People Face with Tax Returns after a Job Change

How to e file ITR on Income Tax Government Portal

52 Weeks Savings Plan: Daily Savings Plans for a Better Tomorrow

Section 44AD of Income Tax Act for AY 2020-21

What is Form 16A?

A Comprehensive Guide to Understand the ITR 7 Form

9 Point Guide on how to File Income Tax Return Online

Section 80C Deductions as per Income Tax Act, 1961

5 Popular Tax-Saving Schemes in India

How to Check Income Tax Refund Status Online in India

Why January Is an Important Month for Saving Tax?

What is TDS Slab?

A Complete Guide for Filing ITR 3 Form

How to View 26AS and Download Form 26AS Online

Guaranteed Return Plans-Why is it a must for you?

How To Save Tax Better with 80C

What is the Difference between Form 16 and Form 16A?

ITR 1: Sahaj Form

All You Need to Know About Section 80C

Section 10 (10d) of Income Tax Act, 1961 on Payouts of Life Insurance Policy

How to File Form 16 for Salaried Employees?

How to Save Income Tax with Insurance

Role of Life Insurance in Your Financial Portfolio

Saving Income tax in 2017 - 18

What Is Salary Protection Insurance and Why You Need It

Union Budget Highlights – 1st February 2022

Difference between Section 80C, 80CCC, 80CCD & 80D

How to e-Verify your Income Tax Return

What is TDS Refund Process?

Save Income Tax by 31st March: Here Is a Checklist

Tax Structure in India

LTC Cash Voucher Scheme October 2020 – Everything You Need to Know

Investment Proofs You Need Submit To Lower TDS Cut From Your Salary

Investing Lump Sum Amount

What Investment Options Come with Tax Incentives?

7 Important Things to Remember While Investing in a Savings Investment Plan

Types of Income Tax Return (ITR) Forms

Section 80G of Income Tax Act

Difference between Section 80C and 80CCC of the Income Tax Act, 1961

All about Online Income Tax Calculator

How to Download Form 16?

Tax Deductions You MUST Know

How to Get Form 16?

All about TDS Payment Online & Due Dates

Interest Imposed Under Section 234A, 234B and 234C

9 Income Tax Myths That Could Cost You Money while Filing returns