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Still looking to save tax? just log on & invest online
March, 25th 2014

You don't have to waste a day's leave or put your running shoes on to finalise your tax saving investments this year. If you know how to use a computer and surf the internet, you can finish it off in no time. For instance, you can use the internet platform to invest in a tax saving mutual fund scheme, buy an online term plan or invest in Public Provident Fund ( PPF) if you maintain a linked savings account with ICICI Bank or SBI.

"Buying a mutual fund or insurance policy online is a simple procedure. You can buy units of ELSS directly through fund houses' websites or through portals that facilitate such transaction if you have completed your KYC (know-your-customer ) procedure," says Suresh Sadagopan, certified financial planner and founder, Ladder7 Financial Advisories. "You can start transacting after registering yourself on the websites. Insurance policies can be bought through the respective companies' portals," he adds. If you are investing in an ELSS scheme, you will have to send the downloaded prefilled application form, along with KYC acknowledgment letter, a copy of PAN card and address proof to the fund house.

For the late comers, you can invest up to . 1 lakh in these instruments and claim tax deduction under Section 80 C of the Income Tax Act. However, you must finalise and make your tax saving investments before March 31 to claim tax breaks this financial year. Here are a few ideal candidates and how you can buy or invest via the internet.

Insurance is always priority

If you have someone dependent on you financially , getting a life insurance cover should be the number one item on your tax saving investment list. And there is no better way than getting a pure term plan for the purpose. For, a term plan is the cheapest form of life insurance and you can buy an adequate life insurance cover for a modest premium. Most life insurance companies offer online term insurance policies and they are cheaper than their offline counterparts. A 30-year-old woman can buy a . 1-crore cover with a term of 20 years for an annual premium of . 6,000-7 ,000.

The premium qualifies for deduction under section 80C. You can complete the process on the insurers' website in an hour's time, unless you are required to undergo medical tests. Next, you can focus on buying a health insurance cover to save taxes. Premiums on health insurance policies qualify for tax deduction under section 80 D. Most health insurance companies allow you to purchase health policies from their websites.

You can visit aggregator portals like and myinsuranceclub.com and compare the premiums and features of the products. If you are under 45 and do not have a history of ailments like diabetes and hypertension, you can complete the entire process online and obtain the confirmation as well as the electronic version of your policy in your mailbox instantly.

For the young and adventurous

Financial advisors recommend tax-saving mutual fund schemes, or equity-linked savings schemes (ELSS), to young tax payers with higher risk appetite. These schemes come with a three-year lock-in period (the shortest lock-in in the 80C list) and they invest mostly in stocks. "You can carry out your research with the help of mutual fund tracking sites like Morningstar and Value Research to view the ratings of funds on various parameters," says Sadagopan. Many mutual fund houses allow you to directly make investments online - however, you should be KYC (know your customer) compliant.

You can complete the KYC procedure by visiting point-of-service offices set up by KYC registration agencies CDSL Ventures and NSDL Database Management. The documents required include your PAN card and address proof (driving licence , passport, Aadhar card etc). Alternatively , you can also invest via sites like fundsIndia, fundsupermart, among others . "You can get registered on the site with your PAN details.

You need to upload a scanned copy of your cancelled cheque on the portal or mail it to us. If you are KYC-compliant , you can start transacting within say 15 minutes. You can complete the entire procedure in an hour's time," says Srikanth Meenakshi, co-founder and COO, FundsIndia.com

Book a five-year tax-saver FD

If you are used to internet banking and booking and liquidating fixed deposits online , here is the easiest way to save taxes. Book a five-year tax saving FD online and your tax saving under section 80 C for the season would be over in a few seconds. "Investment in five-year time deposits with scheduled banks can be made if you have an internet banking account with these banks. Most banks provide the facility of online transfer of funds into fixed deposit instruments.

The investment can be done within a day, by transfer of funds to the FD account," says Suresh Surana, founder of tax consulting firm RSM Astute Consulting . All you have to do is to log on to your bank's net banking portal, choose the taxsaver option and transfer the required amount from your savings account. The FD receipt generated will serve as proof of investment. Please note that some banks do not offer this facility. But do note that interest on FD is taxable. So, many experts believe it is not the smartest way to save taxes.

Invest in PPF

You can open a PPF account with online facilities with the State Bank of India and ICICI Bank, but you have to visit the bank branch to submit the documents. However , once the account is opened, you can make subsequent PPF investments online. "Not only does public provident fund offer risk-free , assured return (of 8.7%), but also offers the EEE benefit (exempt-exemptexempt ). Therefore, it is an ideal tax-saving avenue," says Tanweer Alam, founder and MD, Fincart. Remember, PPF is a 15-year account and you can partially withdraw money from it only after six years.

 
 
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