― Douglas Adams, The Hitchhiker’s Guide to the Galaxy
Say this to someone who has just realised he/she is not prepared for filing tax returns. We challenge you, go on.
As the tax season begins, Indian salaried individuals go haywire. In the quest to save money on income tax, they do a lot of unnecessary stuff in the name of aid. Don’t believe us, read on and be amazed.
Chacha Ji Zindabad
Right from what to name a child to whom to marry the kid off too, we just love to consult our elders. They are like an algorithm without which, the software called India will not work. Many of us consult elders on tax planning and while they may mean well, their advice doesn’t work each time.
For instance, will you buy a second term insurance just because U.P. wale kaka said so? Maybe not and yet many do!
‘Don’t buy mutual funds because they invest in stocks, it will only bring you loss’ said Kanpur wali maasi because she lost Rs. 10,000 doing the same. Young investors often succumb to such advice and end up losing valuable savings on earned income.
The Internet Says So
The World Wide Web is such a helpful space. From guides to buying insurance to knowing what’s on SRK’s mind, we can know anything. However, whatever the internet says isn’t true.
Sometimes fake news and reports come out which only misguide individuals. So if you read that there’s a change in the deduction limits under a certain section of the Income Tax Act, confirm it with trusted sources such as a CA or a newspaper.
The internet is a terrific place to learn and stay informed but do not forget to verify what you read. You don’t want to be that individual who still forwards the message saying UNESCO has chosen India’s national anthem as the best in the world.
This is perhaps the wisest move taxpayers take to prepare for the tax season. However, blind faith often lets unethical CAs and tax planners take advantage. They tell you to invest in plans on which they earn maximum brokerage but it doesn’t reach the deduction limit of Sections which let you save on tax. It’s best to consult those from whom you can get a reference, from a friend, relative, or colleague.
Some people just go to extremes. While it is well and good to resort to superstition, like starting all TV shows with a certain alphabet, it doesn’t make sense to let these astrologers or godmen overrule and influence every decision. Most of them are frauds ready to make a quick buck. True seers are rare and will never consult you on how you can efficiently save tax.
Here’s what you should do.
Put your money into simple tax-friendly products such as term insurance or ULIP. You can claim deductions for them under Section 80C of the Income Tax Act and let’s not forget, they insure your life too. Even health policies work, you can claim deductions on the premiums paid under Section 80D of the Income Tax Act. It’s the investments in right products that save you money on income tax.
Keep it simple, always.