When 31 March comes nearby and we have not done tax planning, beware don’t get hunted by agents who are waiting for you to take the bait. In whole year we don’t plan for tax as we say “Abhi toh Time hai“, “March is too far“, “Tax Planning yeah sab waste hai“. Ultimately we pay price for not paying any heed to Tax Planning. Our government has given benefit to its citizen to do certain investment and some good habits like taking Insurance, Medical Insurance for self and Parents etc and save tax in return. But do we carefully and rationally take decision for saving Tax by doing proper Tax Planning the answer is NO and repercussion is a direct impact on your Investment and Monthly Budget.
Mr Shetty, 25 years old young guy. He works for a reputed IT software firm in Mumbai earnings around 9 lakhs a year. He was the perfect bait for the insurance people and where he has invested?? in money back policy with a quarter premium of Rs. 28,000!!! is it worth the investment sadly it was not. I am not against the product but how it is sold. With proper advice, he could have created a better wealth and investment. After consulting with us, the Current situation he has surrendered the money back policy the client is having adequate Term plan and health insurance for his protection and investment in Mutual funds.
Like Mr Shetty, some general mistake we do make and almost everyone does or have done once in life.
Not Planning Early
First and foremost we fail to plan early or avoid doing tax planning with your adviser. In this melee, you tend to take the wrong decision and reap the benefit of regular discipline investing.
A large one-time investment can make your monthly budget go haywire.So be wise and do planning in advance.
Investing in ULIP/ Endowment
This product is sold as an equity investment and insurance along with tax benefit or triple benefit on one.But my suggestion will be not to mix two things, make life more simple Insurance is and should be for insurance and insurance only and like a wise investment for investment only. Take a Term plan for insurance and rest you can invest in other tax saving investment product.
Other benefits of 80 C
We sometimes fail to take other benefits in section 80 C, like tuition fees paid for children can be claimed even the pre-nursery, play school fees can also be claimed.Stamp duty you pay for buying a house can be claimed for a tax deduction in the year you purchase and also principle you pay on EMI. Infrastructure bonds issued not by government but by infra companies can also claim the deduction.
Other section
Save tax means section 80C comes into the mind. But there is other section too where you can claim deduction like section 80 GG can save Rs 60,000/- for those who do not get HRA in salary or not a salaried employee.Section 80 D for payment of Medical premium can save tax even a preventive health checkup can save Rs. 5,000. Section 80G for notified donation and support your political party save tax under section 80GGC.
Having too much investment in FD and NSC
Interest earned on both Tax saving FD and NSC is taxable hence yo park money is not wise decision and that too for 5 years and more. Instead, park and plan investment in ELSS which is tax efficient and lock in for less period of time and equity in long run can generate inflation-beating returns.
This is some of the five common mistakes we make when we try to do something in haste. It’s better to take help of Tax consultant for tax planning or Financial planner who are expert to guide you and help you. “Rather than making my own medicine I will take help of doctor” – Unknown.
