The last date to save tax for the financial year 2022-23 is March 31, 2023. With only a month left from completing your tax planning exercise, you should get going if you haven’t yet started the tax saving process.
The deadline for making tax-saving investments for 2022-23 is March 31. With only a month left for the same, it is high time to do your tax planning to get more disposable income. However, in this last-minute rush, there are chances of you committing mistakes that could prove costly in the long term. So, here we have listed some of these mistakes which must be certainly avoided:
Investing more money than required
In the last-minute rush, you may indulge in panic investing or pool in more money in tax-saving investments than required. This causes nothing but a disruption in future financial goals. So, it's best to first evaluate taxes already saved by you in the form of house rent, education loans, home loans, etc and then invest only the remaining amount.
ALSO READ | 5 ways to save tax without making any investment
Experts suggest using a reliable online calculator or seeking counsel from a tax specialist to help in computing this total investment amount.
Investing in products that offer low returns
Another mistake that you can make during this end-moment frenzy is investing/purchasing products that offer very low returns, are not liquid enough, or have high overhead costs attached to them. Experts, hence, suggest opting for products that you have a fair knowledge about or can be exited easily.
Making investments without proper planning
While making an investment many people forgot to do proper planning like checking the rate of returns of investments. The interest rate on investments like PPF and FDs is readily available on websites, advertisements, etc. But the rate of return on investments like ELSS, ULIP, etc. whose values are fluctuating on daily basis is uncertain.
So, while making the investment in these, you must check whether their returns are quite enough if they are compared with the return on other investments.
Investing without financial goals
You might forget to link tax-saving instruments with your goal, which can cost a lot in the future. Experts ask people to invest in products that will help in achieving long-term financial goals as all tax-saving investments have some lock-in period which may be from 3 years to 15 years depending upon the source of investment.
Buying insurance policies to save taxes
Many people purchase insurance policies to save tax. However, experts believe that insurance and investments should not be mixed and it is always advisable to purchase a term plan and invest the balance in instruments that offer decent returns.
(Edited by : Abhishek Jha)
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