Tax Planning

What Kind of Aid Do People Take When it Comes to Tax Saving?

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When it was time to declare her investment proofs, Priyadarshini was in a state of panic.

I don’t know who will help me I think Ramesh Chacha as he is a banker. I am too confused. What should I do?

As the tax season approaches, Indian salaried individuals like Priyadarshini go haywire. In the quest to save money on income tax, they look for unnecessary aid.

Read on and you will be amazed to see where people look for help just to save taxes.

Relatives:

Right from our career decisions to personal, we just love to consult our elders. They are like an algorithm without which, the software called India will not work. Many of us tend to consult our elders even when it is related to financial planning and while they may mean well, their advice may not be necessarily accurate sometimes when it comes to financial planning.

For instance, will you buy a second term insurance plan just because Ramesh Chacha said so?

Your uncle will advise you, “Don’t invest in stocks, you will lose your money!” You don’t have to disregard her suggestions but you should evaluate an investment tool yourself and not blindly follow anyone’s suggestion. He might have said it because he lost Rs. 10,000 doing the same!

Young investors often succumb to such suggestions and end up losing valuable savings on earned income.

Internet:

The Internet is your most reliable friend who is always there to help you. From guides to buying insurance to knowing what’s trending, we are overloaded with information. However, whatever the internet depicts may not always be true.

Sometimes fake news and reports are present which may misguide individuals. So if you read that there’s a change in the deduction limits under a certain section of the Income Tax Act, confirm it with trusted sources such as a CA or a valid source of information. The internet is a terrific place to learn and stay informed but don’t forget to verify what you read.

Professionals:

This is perhaps the wisest move taxpayers take to prepare for the tax season. However, blind faith often gives the liberty for unethical CAs and tax planners to take advantage. They tell you to invest in plans under which they have personal gains like earning maximum brokerage but it doesn’t reach the deduction limit of the income tax.

Now that you are aware of the pros and cons of blindly investing your money, ensure that your research thoroughly and invest your money into simple tax-friendly products such as term insurance or ULIPs. You can claim deductions for them under Section 80C of the Income Tax Act and let’s not forget they insure your life too. You can also consider health insurance under which you can claim deductions on the premiums paid under Section 80D of the Income Tax Act. Investing in the right products can help you save on income tax.

Don’t make tax planning complicated just keep it simple always!

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