Last-Minute Tax Saving: 5 Common Mistakes Taxpayers Must Avoid – News18

It has grow to be an annual custom for employers to remind us to begin planning our taxes earlier than the deadline. While taxes are sometimes seen as a monetary burden, what could make it extra demanding is a lack of know-how concerning tax planning. It makes the method much more troublesome whereas incorporating tax-saving methods into the monetary plans.As the tip of the monetary 12 months is simply across the nook, it’s now the appropriate time to begin making your tax planning.

It can be essential to make properly-knowledgeable selections concerning tax-saving investments earlier than the 31 March deadline.

Mistakes to keep away from whereas making tax-saving investments

1. Under the outdated tax regime, one can declare a deduction of not less than Rs 1.5 lakh below Section 80C and a further deduction of Rs 50,000 for the NPS contributions below Section 80CCD(1b). There are additionally deductions for different bills like medical insurance coverage and premium/curiosity paid on training and residential loans. However, not everyone seems to be conscious of your complete deduction and makes fewer investments than they need to. Investing lower than one ought to limit the taxpayer from saving extra taxes and leaving far more on the desk for the taxman.

2. On the opposite hand, investing greater than the required quantity have to be additionally prevented. For instance, if an individual is repaying a house mortgage of a self-occupied home, the curiosity stays deductible below Section 24 however the principal portion of the EMI is deductible below Section 80C. The curiosity claimed on the curiosity of NSCs may also be claimed as a deduction. Adding up all of those, many taxpayers can uncover that they’ve crossed the Rs 1.5 lakh restrict below Section 80C. While this implies no loss for the taxpayer, it could lock the capital for 3 to 5 years.

3. Making correct plans whereas investing can be essential. One ought to rigorously assess the utility of monetary merchandise earlier than investing in them. For instance, you need to put money into ELSS funds in case your funding pool wants fairness publicity, put money into an insurance coverage coverage in case you want life cowl, contribute to NPS if you’d like retirement plans, and contribute to PPF in case you require stability for the long run. Thus, your tax-saving funding needs to be in sync together with your lengthy in addition to quick-time period funding targets.

4. it is extremely essential to grasp insurance policies and assess them earlier than together with them within the monetary plan. For instance, life insurance coverage insurance policies are one such product that requires an extended-time period dedication however untimely closing of a coverage can result in large losses. Thus, you have to assess your want for all times insurance coverage protection, your capability to service the premium for a full time period, and your willingness to just accept a 5-6 % return earlier than making the acquisition.

5. Putting up massive sums of cash in dangerous belongings have to be prevented as it could result in loss, due to the fluctuations available in the market. Considering the buoyancy within the fairness market contributing to ELSS funds, it’s urged to not make investments some huge cash in a single go. Instead, one can put a partial quantity in ELSS and put the remainder of it in different choices like PPF, NSCs, or tax-saving FDs.