Tax-saving products provide immediate returns in the form of taxes saved in the year of investment, which serve as big motivators for saving for the future. The higher a person in the tax bracket, the more would be the gain.
However, with the investment deadline inching closer, tax-payers are on their toes trying to collate all their investments and ensure saving the maximum possible of their income tax. But, choosing the most appropriate tax-saving investment option is not an easy tusk and should be done carefully.
Moreover, the availability of multiple savings and investment options makes it all the more difficult, resulting in taxpayers choosing a wrong product.
To help you out, Prashant Sharma, Chief Investment Officer, Aviva Life Insurance, shares five last-minute tax-saving tips to ensure you make the maximum savings on your income this tax season:
1. Make the most of Section 80C: The Section 80C of the Income Tax Act allows tax deduction of up to Rs 1.5 lakh, which allows you to make investments of the total amount through a wide range of available financial instruments. Investing in the right instruments not just allows you to save tax but also ensures you are in line with your financial plans. You may opt for investments in Public Provident Fund (PPF), National Saving Certificate (NSC), bank Fixed Deposits (FD), Life Insurance plans etc. You should invest in products that you require and not just for the sake of investing. Opt for investing online as it ensures efficiency and avoids last-minute panic. While offline payments leave chances of things going wrong, like a bounced cheque for instance, online transactions would ensure a seamless procedure and avoid any last-minute crisis.
2. Invest in health insurance: If you are relying on your corporate health insurance plan or do not have one at all, health insurance is one of the crucial investments you need to make right away. Right health insurance plans not only enable you to save tax under Section 80D of the Income Tax Act, but also provide you financial protection at time of hospitalisation. Section 80D allows you a deduction of up to Rs 25,000 for premiums paid and Rs 50,000 to people above the age of 60 years.
3. Don t just limit yourself to Section 80C and 80D: Your investments should not be limited to only the aforementioned sections. There are multiple lesser-known investment options that allow you to save on income tax. Under Section 80TTA, tax deduction benefit of up to Rs 10,000 is allowed on interests on your savings bank account. Additionally, you may claim tax deduction benefits on expenses on medical treatment, donations made to NGOs or political parties, as well, under Section 80G, 80GGA, and 80GGC.
4. Some professional advice would be of great help: It is still not too late for and you probably have just the right amount of time for making timely investments before the investment deadline. In a majority of cases, people in an attempt to close their investments before the deadline end up investing in instruments that they do not really need, and later repent. It is always advised to consult an expert who would be able to guide you with the right type of investments that offer tax saving and also help you keep up with your financial plans.
5. Don t wait for the end moment: Start planning your investments right from the beginning of a financial year as chances of errors in last-minute decisions are significantly high. Starting early would allow you to explore your options and make a sound decision about your investments which would also help in your long-term wealth creation plan.