Month of tax saving: Better today, than last hour rush!

17th December 2015

Subrat Mohanty, Head of Marketing Department

As March knocks the door, we rush to make investments in various avenues to save tax. A hurried approach often ends up with opting for the not-so-right choice for investing our hard-earned money. Precisely, if one starts planning for investments to reduce the tax burden in March, the person will not be able to do a proper research for it.
It is always advisable to start planning for tax saving investments from the first day of a new financial year. One procrastinates tax saving or tax return filing only to increase the tax burden or buy an investment plan which may prove to be inappropriate for his or her financial goals.

Pitfalls of ‘last minute’ tax-saving
Chances are higher that one will face hardships in meeting the personal or family’s financial needs during the last couple of months, if large chunk of the money goes for making tax-saving investments in the last few weeks. However, systemic investments throughout the year helps a person enjoy a good flow of income and reduce the burden in the last few months. When it comes to salaried individuals, they should plan the investments properly based on the declarations made to their employers.

Delayed planning and rushing at the last hour often lands one in a situation where the person buys the wrong investment plans that may not suffice the future financial dreams like children’s higher education or marriage. As a result, even if the person saves substantial money from being taxed, he or she may find the investment made as inadequate or not serving all the purposes.
Also, one cannot rule out the chances of mis-selling, if a financial instrument like life insurance is bought at the last hour. People tend to buy any life insurance plan or ULIP based on the suggestions made an agent without adequate research on the same plan. Though the agent may pitch for a particular life insurance plan he thinks suitable for a person, it may prove to be mis-selling later if the person does not read the features of the products and prospects of return and insurance cover carefully.
While buying a life insurance plan to save tax, alongside keeping in mind insurance cover, one should plan much ahead of tax filing deadline. Buying such a financial instrument takes time for processing and background check before the policy is practically issued.


Benefits for an ‘early bird’
An early bird in investment planning always opts for the investment plans with best returns and covers after a thorough research.
Early investment planning ideally helps one spread out the burden of investment cost. To put it simply, if one plans to enjoy the same standard of living in January-March quarter what the person enjoys in the other quarters, investments plans have to be jotted down in the beginning of the year and keep the money aside for that purpose. It is never advisable to spend lion’s share of the income in January-March quarter for making investments to save tax. One of crucial benefits of planning for investments early is getting the best plan for meeting future financial goals at a better cost. Early planning helps one think of all the financial needs in future and buy a suitable investment plan that helps save maximum tax and secure future at the same time.
Therefore, please ensure that you make investments to save tax today, and do not procrastinate for the last date of tax filing.  Jiyo Befikar!



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