March 31st Deadline: Do's And Don'ts To Follow While Doing Last Minute Tax Saving
With the financial year 2023-24 set to end on 31st March 2024, many taxpayers must be busy with their last minute efforts to save tax. Amidst this, many of you might be receiving a lot of advice regarding what all to do, right? But what is equally important is to know what not to do. So here is a list of do¡¯s and don'ts you need to keep in mind when indulging in last minute tax saving ahead of 31st March deadline.
March 31 Deadline: Do's And Don'ts To Follow For Tax Saving
Check existing declarations before going forward
Before you shortlist any tax-saver investment or any other way to save tax in the last minute, check what declarations you have made and then go ahead accordingly. Also check if the existing? investments you have done or the allowances you are entitled to, they are eligible for tax saving. If yes, then do not miss out on claiming them in your last minute effort to reduce tax outgo.
Also Read:?How You Can?Save Tax?By Paying Attention To Your Salary Structure
Do not mix insurance and investment
Let's keep things clear and concise. Purchasing insurance is not investing. You anticipate receiving money back when you invest it somewhere. However, the purpose of purchasing insurance is to insure against risk; this includes both the risk of dying, which life insurance covers, and the risk of incurring large medical bills in the event that health insurance is not obtained.
Notwithstanding its advantages, many people tend to avoid pure term insurance because they expect'something in return' for their premium money. This forces them to purchase combo plans or less-than-ideal insurance policies that offer "some returns," like your premium returned or invested in part.?
However, the point of life insurance is lost in the midst of all of this. Pure-term insurance pays your nominee the guaranteed amount in the event of your death. Nothing comes to anyone if you survive. And maybe that's the main purpose of life insurance, isn't it? to protect against the risk!
Similar to this, when it comes to health insurance, it's best to keep things straightforward and get sufficient, dependable coverage for you and your family because one hospital stay can wipe out all of your life savings.?
Think long term
Do not take any step just by thinking about the 31 March deadline. In whatever tax saving way you opt for,whether investment or insurance, think about what impact it can have on your long term financial life. A wise decision taken at this time can go a long way in helping you fulfill your life¡¯s goals.
Focus on the lock-in periods of 80C avenues
While every section 80C instrument has a lock-in period, some have incredibly long terms. Examples of these include tax-saving fixed deposits (five years), NPS (maturity at age 60), Sukanya Samriddhi Account (until the girl turns 18), and PPF (15 years).
Thus, before committing to long-term products, you should determine your short- and long-term goals, risk tolerance, and investment horizon.?However, because ELSS funds involve market risk, investing in them requires you to be able to withstand short-term market fluctuations.?
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