The main part of tax planning, allows the tax payer to utilise various tax freedom, deduction, and the advantages to minimize tax liability in a particular financial year. There is a saying by a famous personality “In this world nothing is certain, other than death and taxes”.
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Many people are clueless about the danger of not doing tax planning in India. It is the key quality of the overhaul financial planning and must be planned in a logical fashion. When we are working in companies, we get email from finance department staring that some documents must be submitted to avoid getting taxed. Some people respond to the query, and some ignore the email.
Common Mistakes Done By People Relating To Tax Planning in 2017
Disregard Expenses That Are Tax Exempted: Many people do not know that expenses incurred relating to children tuition fee, insurance premiums, house loan, house rent qualify as the main tax deductions. They do not submit the required bills and end up on the losing side.
Too Much Of Investments In Equities: Most of the investors/customers like to invest in the equity linked savings certificate, offered by mutual funds. This will qualify for tax deduction under Section 80C. The mistake done by the Investment In Equities are as follows:
- Huge investment of money at once.
- Wrong time in doing investment.
- Investing huge amount at end of year.
Hence, it is advisable to distribute the investment through the entire year.
Investment For Saving Tax:
Investment For Saving Tax:
You want to save lot of money to save the tax in India. Sometimes, you will take inappropriate judgements and it impacts the tax planning. You must be careful in making the investment in Mutual Funds, Insurance Plans, Shares, Stocks and other financial products.
Investment In Endowment:
Investment In Endowment:
When you go to bank during tax seasons (April—March) the executives try to sell financial products. Most of the people, do not understand that schemes like the endowment plan is a long term financial plan, having maturity of 10-20 years. Some part of the endowment plan goes towards mortality charges and distributor commission.
Investment Done On Advice:
Investment Done On Advice:
One hears a lot of advice from your friends/colleagues regarding financial products. People like financial advisors, certified financial planners, mutual fund advisors, money managers, insurance agents, relationship managers will sell financial products. Furthermore, they attract customers and most of them take financial products not knowing pros and cons. This is matter of great concern and must be resolved.
Investing In Incompetent Scheme:
The people in India make the error of investing in long term fixed deposits, insurance, National Savings Certificates (NSC). The interest earned on the Fixed Deposits and NSC is very taxable. One must always go in for the products like the Investment in PPF (Public Provident Fund), that comes under tax deductions, and the interest earned is tax free.
So, please be well-organized and have lot of data, to avoid the mistakes, while investing to save tax.
So, please be well-organized and have lot of data, to avoid the mistakes, while investing to save tax.
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