Isn’t it that time of the year when you try to evaluate all your investment proofs to save taxes? Since tax saving can be an essential part of your financial portfolio, it should be filed and submitted on time to avoid the last-minute hassle. However, many of you might have been unable to do so due to personal reasons. Hence, you might have ended up in a financial turmoil at the last moment, which might have brought you here to understand the last-minute guide to tax-saving investment.
Let’s take a look below to understand how you can save taxes last-minute with the help of the following tips mentioned below:
- Evaluate your pay structure
Before submitting the tax proofs, it can be crucial to evaluate as well as review your tax saving investment options. As a tax-payer, see to it that you don’t choose between the different types of investment tools without analyzing the pay structure and household expenses. After the Union Budget of 2020, it can be crucial that you make a decision whether you want to opt for the new tax regime or the old one.
- Opt for tax saving options
There can be numerous tax saving options available in the market that can reduce your tax liability. If you are looking forward to saving more taxes, you should opt for the types of investment plans that can be available under Section 80C of the Income Tax Act, 1961. Under Section 80C, you can qualify to claim a deduction up to Rs. 1,50,000 on your taxable income.
The applicable investment vehicles that fall under Section 80C can be as follows:
- Unit Linked Insurance Plans (ULIP)
- Equity Linked Savings Scheme (ELSS)
- Mutual Fund (MF)
- Public Provident Fund (PPF)
- National Pension Scheme (NPS)
- National Savings Certificate (NSC)
- Invest in insurance policies
Life insurance schemes might be an effective way to reduce your tax burden. Many insurance companies can push you to buy insurance products, such as a Unit Linked Insurance Plan (ULIP) and traditional insurance plans, such as term policies, health insurance, etc. to save taxes last-minute. The right insurance policies can provide you with an adequate risk cover as well as offer good return on investment.
While these top three tips mentioned above can be crucial, there are also a few key points you should consider during last-minute investment. Therefore, let’s go through these top five tips mentioned below that can be a part of your last-minute tax-saving investments:
- Save a specific proportion of your savings to invest in tax-saving options
- Fulfill your immediate financial goals after the completion of the lock-in period of your selected investment vehicle
- Identify your primary aims and objectives of tax-saving
- Compare and analyze the rate of return
- Choose an investment option before you reach the deadline of tax payment
To sum up, you should always remember if you are investing before or after the deadline for your tax declaration. Moreover, consider your need before you opt for any of the tax-saving investment options mentioned above. If you are unable to understand where to invest money, consult a financial expert to help you with the process. While these above-mentioned tips can guide you better, all you have to is stay calm at the last minute, or you might end up in a mess.