Tax Saving Planning: Tax saving is an exercise throughout the year, but some people miss it, then do it aggressively at the last minute, which can lead to financial problems.
Tax Saving: Now less than a week is left for the end of the current financial year 2021-22, that is, if you have not achieved the tax saving target set by you in this financial year, then now you have only something to do. Only days are left. Although tax saving is an exercise throughout the year, but some people miss it, then do it aggressively at the last minute, which can lead to financial problems. To avoid any such problem, try to stay away from these five mistakes so that there is also tax savings and there is no negative impact on the financial goal.
non-calculating tax liability
There are many sources of income such as income from salary, business income, interest, return on investment in shares or mutual funds, profit on sale of property. Tax liability is different on all of them, while some also get tax benefits. Calculate how much taxability is being generated on all your types of income. This will make it easier for you to know how much you have to invest to save tax and the taxation provisions in all these options will enable you to decide which investments will help you save tax.
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excessive investment
The calculation of how much money to invest in tax saving instruments to save tax is important so that you do not invest more than you need. Investing more than necessary can lead to financial problems in an emergency.
Investing in a single tax saving option
Due to last minute time constraints, most people invest their entire money in a single asset class instead of comparing multiple options. However, such a mistake should be avoided as investing in the same asset class increases the risk. Conversely, if you invest money in more than one asset class or if you invest money in different schemes of the same asset class, then the risk will be reduced. For example, instead of investing only in ELSS, invest your entire money in ELSS as well as NPS, Tax Saving FD, PPF, Gold etc.
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Invest in Tax Saving Schemes for the short term
One should not compromise on your financial goals while choosing a tax saving instrument to save tax. One should choose such a tax saving product which will help in achieving the financial goal in the long term. Do not invest in tax saving instruments with short term financial goals as all tax saving instruments have a lock-in period of 3-15 years. It cannot be liquidated before this lock-in period has passed.
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Ignoring the plan while buying an insurance policy
Some people buy an insurance policy in the month of March to save tax and some people do not pay much attention to the details related to it while buying it. In such a situation, sometimes it may happen that you buy the wrong policy which is not useful for you i.e. it does not get enough coverage and the returns are also not good. In such a situation, before buying a life insurance policy, buy a life insurance policy with adequate coverage according to the needs of your family.
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