Tips for investing to save tax

Most salaried employees are running around to make lastminute investments to save  income tax and provide the proof of investments to the employer. This is because most companies ask their employees to submit the proof of their investments in January to avoid deduction of higher taxes from the salary.

Last minute tax planning is an age old practice that forces tax payers to make hasty, and often wrong, decisions. Typically, some individuals invest more than the required amount to save taxes. They also end up parking money in wrong products in the process, which may have an adverse impact on their cash flows and return prospects. It is not surprising that the insurance industry do most of its business during the tax- saving season between January and March every year. “Often we tend to buy products or make investments without doing the due diligence on our total tax structure.

Having a tax plan in place at the start of the financial year will help you make better decisions and even reduce the burden on financials at the end of the financial year.
Tax benefit u/s 80C

Tax planning is all about Section 80 C for many individuals. They believe they are claiming all tax break if they invest Rs 1 lakh in some of the usual investment tools like PPF,FDs,National savings certificates, tax planning mutual fund scheme and so on.

But what tax payers don’t account for is the employees’ contribution to provident fund, children’s school tuition fees and the principal repayment of housing loans also qualify for tax deduction under Section 80 C, which is capped at an overall limit of Rs 1 lakh. If you invest anything over and above Rs 1 lakh in ELSS, life insurance, PPF or NSC, it does not give you an extra tax benefit. It is just that your money gets locked in for a certain period which can range from 3 to 15 years in the above mentioned products.

For example, EPF contribution and life insurance premiums are covered under Section 80C apart from the principal repayment of housing loans. That means most regular employees can invest only a few thousands extra under Section 80C. For example, if your EPF contribution is Rs 5,000 per month, it would exhaust more than half of Section 80 C. Add your life insurance premium and you will know how little you can save under the section.

“Typically, your existing investments would include your contribution to EPF, life insurance premiums, housing loan repayment, stamp duty and registration fees paid, children tuition fees, etc. If the sum of all these exceeds Rs 1 lakh, then you don’t need to invest further as the deduction is capped at Rs 1 lakh.
However, if the sum of your tax-saving investments is less than Rs 1 lakh, then you may consider investing the balance amount for additional tax benefits. For example, if your existing investments are to the tune of Rs 60,000 then you can still make additional tax saving investments of Rs 40,000 (Rs 100,000 minus Rs 60,000). “But the tax saving on the additional investment would beRs 4,000 only. In such cases, many tax payers, would rather opt to pay income tax of Rs 4,000 than blocking Rs 40,000 in a tax-saving scheme.

Think before you select
“The philosophy of healthy investment has two essential elements: returns and associated tax savings.

While planning your tax-saving investments, you must consider expenditures which are generally incurred and available as tax breaks. “Your normal expenditure such as house rent, medical expenses for the family or spending on your children’s school fees have tax exemptions. You have to understand the nature of each tax break; and depending on the shortfall, the remaining amount should be invested in tax-saving instruments.
Invest small amount intax saving instruments.

According to investment experts, many individuals tend to get defensive when they are told that they are investing more than required to save taxes.

Experts point out that it is not that simple. When you are putting more money in tax-saving instruments, you are parting with the money that you could have managed better to earn superior returns. “The subsequent premium payment for the next 15-20 years becomes a commitment when the policy holder could have simply split the money between a term cover and ELSS and earned higher returns.”
A 5- year tax FD or a 6-year NSC or the 15-year PPF are relatively illiquid. Hence you can get into a tight spot in case of an emergency when you need more cash.



, , , , , , , , , , , , ,

  1. #1 by investing in reits on April 1, 2013 - 10:07 am

    I can’t remember the last time I enjoyed an post as considerably as this one.
    You’ve gone beyond my expectations on this subject and I agree along with your points. You’ve done well with this.

  2. #2 by mouse click the next internet page on April 1, 2013 - 12:00 pm

    wonderful post, very informative. I wonder why the other experts of this sector don’t notice this. You should continue your writing. I’m sure, you have a
    great readers’ base already!

  3. #3 by echelle telescopique on April 1, 2013 - 3:59 pm

    Hi there, I want to subscribe for this webpage to take hottest updates, so where can i do it please help.

    • #4 by srinivasulumvr on April 1, 2013 - 4:49 pm

      You can subscribe/follow up by entering your email id.

  4. #5 by saving private ryan beach invasion on April 2, 2013 - 4:19 pm

    I was curious should you ever considered changing the page
    layout of your weblog? Its really effectively written; I love what youve got to say.

    But perhaps you could just a little a lot more in the way of content so individuals could
    connect with it better. Youve got an awful lot of text for only having one or two pictures.
    Maybe you can space it out much better?

  5. #6 by personal finance on April 2, 2013 - 10:14 pm

    I undoubtedly did not realize that. Learnt something new today!

    Thanks for that.

  6. #7 by Jewelry Collection Auction on April 2, 2013 - 10:17 pm

    Hey there would you mind letting me know which web host you’re using? I’ve loaded your blog in 3 completely different browsers and I must say this blog loads a lot quicker then most. Can you recommend a good internet hosting provider at a reasonable price? Thank you, I appreciate it!

  7. #8 by on April 4, 2013 - 5:48 pm

    extremely nice post, i undoubtedly adore this superb web
    site, carry on it

  8. #9 by on April 6, 2013 - 9:45 am

    This is how to get your foot inside the door.

  9. #10 by Felicitas on April 7, 2013 - 12:49 am

    But wanna comment that you have a really nice internet web site , I enjoy the style and design it genuinely stands out.

  10. #11 by Click here for information regarding real estate consultant on April 10, 2013 - 5:32 am

    Every weekend i used to go to see this web page, as i wish for enjoyment,
    for the reason that this this web page conations genuinely good funny information too.

  11. #12 by on April 10, 2013 - 6:03 am

    My coder is trying to convince me to move to .
    net from PHP. I have always disliked the idea because of the
    expenses. But he’s tryiong none the less. I’ve
    been using Movable-type on various websites for about a year and am nervous about switching to another platform.
    I have heard fantastic things about Is there a way I can transfer all my wordpress content into it?
    Any kind of help would be greatly appreciated!

  12. #13 by real estate broker news on April 10, 2013 - 10:43 am

    Hello, i feel that i saw you visited my web site thus i came to go back the desire?
    .I’m attempting to find issues to improve my site!I suppose its ok to make use of a few of your concepts!!

  13. #14 by Pennsylvania Home remodeling contractor info on April 10, 2013 - 12:18 pm

    Good day! Do you know if they make any plugins to protect against hackers?
    I’m kinda paranoid about losing everything I’ve worked hard on.

    Any suggestions?

  14. #15 by on April 10, 2013 - 3:22 pm

    We are a bunch of volunteers and starting a new scheme in
    our community. Your site provided us with valuable info to work
    on. You have done an impressive job and our whole neighborhood might be grateful to you.

  15. #16 by Click here. on April 10, 2013 - 5:31 pm

    Do you have a spam issue on this site; I also am a
    blogger, and I was wanting to know your situation;
    many of us have developed some nice methods and we are looking to exchange methods with others,
    be sure to shoot me an email if interested.

  16. #17 by handmade products info on April 10, 2013 - 6:05 pm

    This is a topic that is close to my heart… Thank you!
    Exactly where are your contact details though?

  17. #18 by law of attraction coach news on April 11, 2013 - 4:52 am

    Pretty nice post. I just stumbled upon your blog and wanted
    to say that I’ve truly enjoyed browsing your blog posts. After all I will be subscribing to your feed and I hope you write again soon!

  18. #19 by on April 11, 2013 - 5:49 am

    I’ve been surfing online more than 3 hours nowadays, yet I by no means discovered any fascinating article like yours. It’s lovely price sufficient
    for me. Personally, if all webmasters and bloggers made excellent content as you probably did, the internet will probably be a lot more useful than
    ever before.

  19. #20 by law of attraction on April 11, 2013 - 7:57 pm

    I tend not to write many responses, but I read a few of the remarks
    on Tips for investing to save tax | invest therapy..

    .. I actually do have some questions for you if you do not mind.
    Could it be simply me or do a few of the remarks come across as if they are coming from brain dead people?
    😛 And, if you are posting on additional places,
    I would like to follow you. Could you make a list of all of your social community sites like your
    twitter feed, Facebook page or linkedin profile?

    • #21 by srinivasulumvr on April 12, 2013 - 3:23 am

      Thanks to you…You can reach me on twitter –

  20. #22 by A fantastic read on April 12, 2013 - 6:59 am

    Very good article. I absolutely love this site.

  21. #23 by Burberry Bags on April 12, 2013 - 12:04 pm

    Thes Burberry Bags ended up therefore awesome! They were tremendously light! The only real drawback appeared to be i used these folks while it is raining one time and jaded 😦 In general, that i adored these folks!

  22. #24 by Click here!. on April 12, 2013 - 3:31 pm

    Hi there just wanted to give you a brief heads up and let you know a few of the images
    aren’t loading correctly. I’m not sure why but I think its a linking
    issue. I’ve tried it in two different browsers and both show the same outcome.

  23. #25 by topshop on April 13, 2013 - 4:47 pm

    Hello to all, how is the whole thing, I think every one is getting more from this website,
    and your views are nice designed for new users.

  24. #26 by on April 13, 2013 - 6:16 pm

    You could certainly see your expertise within the article you write.
    The arena hopes for more passionate writers such as you who are not afraid to mention how they believe.

    All the time follow your heart.

  25. #27 by cheapest ticket on April 14, 2013 - 2:51 pm

    I wanted to thank you for this fantastic read!! I definitely loved every bit of
    it. I have you saved as a favorite to check out new stuff you post…

  26. #28 by gw2 gold on April 14, 2013 - 6:30 pm

    Fairly lovable gw2 gold

  27. #29 by law of attraction coach information on April 14, 2013 - 9:15 pm

    Hey very nice blog!! Guy .. Beautiful .. Wonderful .
    . I will bookmark your site and take the feeds also?
    I’m glad to seek out so many useful information right here within the publish, we need develop more strategies on this regard, thanks for sharing. . . . . .

  28. #30 by CLICK HERE on April 15, 2013 - 5:11 pm

    Hi, just wanted to tell you, I loved this blog post. It was funny.

    Keep on posting!

  29. #31 by Zelma on April 16, 2013 - 12:06 am

    Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point.

    You obviously know what youre talking about, why throw away your intelligence on just posting videos to your blog when you
    could be giving us something informative to read?

  30. #32 by pro painting contractor maryland on April 16, 2013 - 11:12 am

    Keep on writing, great job!

  31. #33 by Click here to investigate on April 17, 2013 - 4:44 pm

    Hi there, its nice post regarding media print, we all
    be familiar with media is a wonderful source of data.

  32. #34 by delaware stairlift installer on April 17, 2013 - 5:49 pm

    I’m impressed, I have to admit. Rarely do I come across a blog that’s both educative and interesting, and without a doubt, you’ve hit the nail on the head. The problem is an issue that too few people are speaking intelligently about. I am very happy I came across this during my search for something relating to this.

  33. #35 by Isabel on April 17, 2013 - 6:05 pm

    Hi! I could have sworn I’ve visited your blog before but after browsing through many of the posts I realized it’s new to me.
    Nonetheless, I’m certainly delighted I came across it and I’ll be book-marking it and checking back

  34. #36 by Thelma on April 18, 2013 - 12:36 am

    I am no longer sure where you’re getting your information, however great topic. I must spend a while studying more or working out more. Thank you for wonderful info I was on the lookout for this information for my mission.

  35. #37 by Carlo Cotty on April 19, 2013 - 11:38 pm

    I simply want to tell you that I’m beginner to blogs and truly loved your web site. Most likely I’m going to bookmark your blog post . You absolutely come with wonderful posts. Thanks a bunch for sharing your website page.

  36. #38 by Curtis Mathena on April 20, 2013 - 12:54 am

    I simply want to say I am very new to blogs and honestly savored you’re web blog. Probably I’m want to bookmark your blog post . You amazingly come with very good well written articles. Kudos for sharing your webpage.

  37. #39 by Click here! on April 21, 2013 - 9:20 pm

    Currently it seems like BlogEngine is the top blogging platform available right now.
    (from what I’ve read) Is that what you’re using on your blog?

  38. #40 by Extra Resources. on April 22, 2013 - 4:33 am

    Hello there, just became aware of your blog through Google,
    and found that it’s really informative. I’m
    gonna watch out for brussels. I will be grateful if
    you continue this in future. Numerous people will be benefited from your writing.


  39. #41 by Freelance Writers on April 23, 2013 - 7:17 am

    I just could not leave your site prior to saying that I really enjoyed the quality information you offer to your visitors… Will be back often to check up on new stuff you post! 🙂 Legitimate Work At Home Jobs

  40. #42 by intangible on April 23, 2013 - 11:09 am

    Just discovered this site thru Yahoo, what a pleasant surprise!

  41. #43 by toko bumbu on April 23, 2013 - 11:36 am

    I believe that one of your current ads triggered my web browser to resize, you may well need to set that on your blacklist.

  42. #44 by homepage on April 23, 2013 - 12:02 pm

    Weird , this page shows up with a dark hue to it, what shade is the primary color on your web-site?

  43. #45 by view site on April 23, 2013 - 1:21 pm

    The majority of of the opinions on this particular blog site dont make sense.

  44. #46 by translate website from english to chinese on April 23, 2013 - 4:08 pm

    Strange , your post shows up with a dark color to it, what shade is the primary color on your webpage?

  45. #47 by guide to flood damage repair on April 23, 2013 - 4:14 pm

    You ought to really moderate the responses at this website

  46. #48 by garage door replacement santa monica on April 23, 2013 - 4:19 pm

    Oh man! This blog site is sick. How do you make it look this good ?

  47. #49 by cleaning company london on April 23, 2013 - 4:36 pm

    An interesting blog post there mate . Cheers for that !

  48. #50 by salem nh electric company on April 23, 2013 - 5:29 pm

    I dugg some of you post as I cerebrated they were very beneficial very helpful

  1. your input
  2. Emporio Armani Watches

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s