A tax saving investment is like a project. You need to keep a lot of things in mind. And amidst the rush of registering before 31st March, it seldom becomes possible to make the right decisions and assure satisfactory tax planning for salaried persons. However, with some precise knowledge, you can make the right decisions.
Given below are three mistakes that people commonly make and should avoid while making a tax saving investment. It goes as follows:
1. PPF (Public Provident Fund) and FDs (Fixed Deposits) are safe:
When it comes to PPF, making an investment is a wise option. If your PPF (Public Provident Fund) account already exists, all you have to do, under Section 80C, is to add the remaining portion and then everything is finalised. Now, if the proof of your investment is to be framed this week or in a couple of days, it is inconvenient to make an account. The underlying risk here is that if you just go on the edge, you will be cutting it too short and too close to the deadline. Due to this, you will be deprived of the deduction. Keep in mind that creating an online PPF (Public Provident Fund) account is much beneficial than an offline one. Most banks have this option available. Make the most out of it.
2. It is okay to be out of proofs now:
Your inability to submit valid proofs on 31st March is closed now. When a person is unable to provide valid proofs to avail tax saving options, the TDS is subtracted from their March income. Whereas, on the other hand, when you manage to make proper investments by the mentioned date, you can ask for a refund from the tax. That works under one condition. That one condition is that you get a refund or claim the refund only when your tax return is filed in the month of July.
3.Study your risks:
For the investment you wish to make, your inability to take risks is going to keep you off the guard. You will make very little out of your investment. Making an investment is easy. However, you need to study the risks associated with it. It is only when you have full, or even some, knowledge on the risks that cling on that you will be able to make right investments for yourself. For instance, tax saving mutual funds are beneficial if you plan a future that allows you to keep your money at a distance.
This time of the year keeps two groups very busy i.e. the individuals struggling to save income tax and second, the accountants. Last minute framing is full of hassle and chaos that obviously, invites mistakes. Hereunder, all you need is some proper income tax planning and a note on the common mistakes that we usually make while making a tax saving investment. Now that you know, you can make quick and wise decisions.