You hardly have two days to finish your tax-saving investments in this financial year. Yes, the current financial year closes on March 31. So, if you were waiting for the thrill of finalising the investments in the last minute, it is time to act. However, you should know that such last-minute decisions often lead to mistakes. Here are a few common ones you should not commit this financial year.

Do not focus solely on tax planning
Surprised? Well, tax-planning is not the end, it is just a means to reach your financial goals. So, do not just think of the permissible Rs 1.5 lakh under Section 80C and make investments decisions. A host of investments such as Equity Linked Saving Scheme, Public Provident Fund, National Saving Scheme, and so on, qualify for tax deductions under Section 80C. Each one has different lock-in period, interest/return possibility, and taxation. So, it is extremely important to find out the details of your investments, too.

Do you have a goal?
A goal-based investment is always preferable, even when it comes to tax-saving investments. So, just pause and think about your various financial goals. Do you think you need to make extra provisions to make a certain goal? If so, link your tax-saving investment in this financial year to the goal. This will help you to choose the right investment option, too. For example, if you need to meet the goal in five years, you may choose an Equity Linked Saving Scheme or tax saving/planning mutual fund scheme.

Beware of the disparate tenures
As said before, Section 80C has a list of investments that qualify for tax deduction. However, you should always choose an investment that matches the time you have in hand to achieve your financial goal. For example, it would be foolish choose a long-term investment like PPF if you have medium-term goal of, say, five years. Yes, PPF is a 15-year product. Though it allows partial withdrawals after seven years. In such a scenario, it would be wise to choose an ELSS or a five-year National Saving Certificate (NSC).

Now that you know investments allowed under Section 80C come with disparate lock-in period, it is time to figure out that their returns are also taxed differently. Some government-backed schemes like PPF offers tax-free returns, while the maturity proceeds from National Saving Certificate is taxable. Also, remember that returns from ELSS is not tax-free anymore. Returns from ELSS funds are treated as long-term capital gains and taxed at 10 per cent.

Insurance plans are not meant for investment
Blame it on the difference in commission structure or old habits. Most individuals often end up with insurance plans if they go to an advisor or bank to make last minute investments. Often, insurance plans are mis-sold as five-year bonds. Do not fall for it. Insurance is extremely important. If you have financial dependents and you do not have an adequate life insurance cover, you must buy a cover before anything else. However, the best way to buy the cover is to buy an online term insurance plan that comes with a cheaper premium. However, do not buy insurance plans thinking they make good investment products. It is always better to keep your insurance and investment needs separate. Buy term insurance cover and invest in mutual funds.