Tax Saving Tips: The month of March is coming to an end. In such a situation, the deadline for many financial transactions is about to expire soon, in which investment is necessary to save tax. If you want to take advantage of the tax exemption in the financial year 2023-24, you have the last chance to invest. Many times taxpayers make some mistakes while doing tax planning at the last moment due to which they face problems later. If you are doing tax planning before March 31, don’t make these mistakes-
Avoid these mistakes when investing for tax savings.
1. Not investing as needed.
Many times people do not choose the right schemes while investing for tax savings at the last moment. PPF can be a safe investment option if you want to reap big gains in the long run. Whereas through NPS you can plan your retirement. Keep your needs in mind while choosing all these schemes.
2. Avoid overinvestment-
If you are investing to save tax, keep in mind to avoid overinvesting. For example, if you have taken a home loan, you will get the benefit of tax exemption on its EMI interest under Section 24 of Income Tax. Rebate on principal amount will be available under Section 80C of Income Tax. In such a situation, if you are investing in PPF only for tax exemption, keep in mind that you should not invest more than you need because the maximum exemption under Section 80C of Income Tax is The limit is Rs 1.50 lakh only.
3. Not investing in different schemes
Many times taxpayers do not diversify their investments while investing for tax savings. In such a case, they have to face problems later. You should try to invest in different schemes as per your requirement. For example, you can invest in schemes like PPF for the long term. At the same time, options like ELSS funds are also available for good returns.
4. Not doing proper financial planning
Many times people do not do proper financial planning while saving tax at the last minute. Due to which they face problems later. In such a situation, try to plan your investment only after properly investigating the future returns and benefits of any scheme.
5. Not knowing all the deductions
As per the old tax system, apart from the exemption of Rs 1.50 lakh under Section 80C of Income Tax, taxpayers also get the benefit of many other tax deductions. In this, an additional exemption of Rs 50,000 is available under section 80CCD(1b) on investment in NPS. Apart from this, one also gets the benefit of tax exemption on interest rate on home loan and taking medical insurance etc. Don’t forget to include all these deductions while investing to save tax in such a situation.
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