Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT Audit :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: VAT RATES :: TDS :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: articles on VAT and GST in India
 
 
« Service Tax »
 All GST council decisions taken by consensus and will be passed in states as well
 It would be wiser to put off implementation of GST till September
 Revised GST legislation may pinch working capital of industries
 GST to result in price reduction for consumers: Hasmukh Adhia
 Bill gives free hand to CAG to audit GST operation
 Lok Sabha to discuss GST bills on Wednesday
 GST to strengthen organised logistics companies
 No need for Parliament nod to waive property tax in Delhi
 CBEC to be renamed, reorganised for GST regime
  GST debate now continues on categorisation of products
 GST coming soon, but don’t expect quick benefits; rich valuation to stall stocks

Rushing to save tax? Look beyond insurance at other options too
March, 19th 2013

You hardly have two weeks to finalise your tax saving plan before the deadline on March 31. If financial advisors are to be believed, many individuals think of tax planning only in the last two weeks of the month of March. They also quickly add that these individuals often fall for unscrupulous tactics of their insurance agents or personal bankers. It is only much later that they realise the folly of buying wrong products. "Many people look at such investments merely as tax-saving tools. Also, as they have very little time to evaluate the product features , they are bound to make mistakes. The right approach is to make investments that are suitable for you, after you evaluate them from a return on investment perspective, including the potential tax benefits," says Amarpal Chadha, tax partner with consultancy major Ernst & Young.

In other words, the obsession with preventing the tax dent on your savings could, in fact, cause long-term harm to your finances. If you are in this group, here are some tips that may help to avoid some common mistakes this year.

IGNORING ELIGIBLE TAX BREAKS

Thanks to extensive campaigns and incessant calls from distributors, most tax payers are aware of the tax deduction of up to Rs 1 lakh that they can claim under Section 80C. Most individual focus entirely on this deduction and overlook other investments or expenses that qualify for tax breaks. For example, many people don't include Employees Provident Fund (EPF) contribution or tuition fees paid for their children in their tax planning. Take a look at your salary statement and tax statement given by your company before finalising your tax plan this year. In fact, according to experts, many individuals may not be required to make any large additional investment if they take into account their EPF contribution and life insurance premiums.

RemindBSE -4.42 % yourself that the Income Tax Act provides several other avenues to save taxes. For instance, if you are paid house rent allowance (HRA), but do not pay rent as you live with your parents, you can still claim the deduction. You can enter into an agreement with your parents and pay the rent. However, remember, the amount will be treated as their income. Moreover, you can also avail of deduction up to Rs 15,000 (Rs 20,000 in case of senior citizens) under Section 80D if you are paying your parents' health insurance premium. You can even claim tax breaks on your expenses on preventive health check-up for yourself and family. Although it is a part of section 80D, this deduction deserves a special mention as it was introduced only this year. If you have receipts of any preventive health check-up expenses undergone this year, make sure you preserve them.

This year onwards, such check-ups will earn you deductions of up to Rs 5,000. "Since this is a new tax-saving avenue, introduced in last year's Budget, many people may not be aware of this deduction," says Vineet Agarwal, director, KPMG. Make sure you are not one of them.

THE LURE OF COUNTLESS INSURANCE POLICIES

If you look at the portfolio of most individuals who subscribe to last minute tax planning, you would really think that buying life insurance policies is their favourite pass time. In fact, many of these individuals fall for the sales pitch of "tax saving plus insurance cover plus return" . Remember, buying a life insurance policy is not a one-time affair, unless it is a single premium policy. It may help you save taxes this year, but you will have to shell out the premium every year for the next 10-20 years.

If you fail to pay the premiums on time, your policy will lapse depriving your family of the life cover. Besides, it is a long-term product which will yield decent returns only after, say, 10 years. Therefore, if you surrender it after the mandatory lock-in period of five years, you may not get a satisfactory corpus. If you have dependants , go for a term policy. It will provide a large sum assured at a very reasonable cost, in addition to tax benefits. However, in case you are convinced about the insurance-cum-investment policies, buy them only if you are confident of paying premiums every year.

FAILING TO MAXIMISE RETURNS

Public provident fund (PPF) --- one of the favourites with tax-payers --- is widely accepted as an ideal retirement planning tool for conservative individuals. After all, it fetches a tax-free return of 8.8% today. However, many make the mistake of investing money into PPF at the last minute. If you do so, you lose the opportunity of maximising the return. If you want to maximise returns from PPF, ensure that you invest before the 5th of every month to earn interest for that month. If you are putting a lump sum amount in tax saving mutual fund schemes, or ELSS, this year, you could remember this principle next year.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Services SEO LLC e-boost Search Engine Optimization Services Internet Marketing Services Website Placement Services On-site Webs

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions