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Last-minute tax planning: Here is what you should do

It may sound too difficult to execute task when you have a few hours on hand. But not all is lost. You can still make some simple investments and save tax.

March 29, 2022 / 06:20 PM IST

The tax planning deadline for FY 2021-2022, is just a couple of days away – March 31, 2022. If you have not yet done with your tax planning, then do it now.

It may sound too difficult to execute the task when you have only a few hours in hand. But not all is lost. Each one of us has some prior commitments – these include repayment of home loan, payment of insurance premium, payment of tuition fee for kids and contribution to employee provident fund. In addition to these expenses that get you income-tax deductions under Section 80C, you can also make some fresh investments.

For example, contribution to tax-saving funds, Public Provident Fund, National Saving Certificate, Senior Citizen Savings Scheme, Sukanya Samriddhi Yojana, and tax-saving bank fixed deposits are also eligible for tax deduction under section 80C of the Income Tax Act. Contributions up to Rs 1.5 lakh for all avenues mentioned above can be claimed in a financial year.

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If your contributions are running short of Rs 1.5 lakh amount, then you should invest in a product that suits your requirement. Avoid getting into complex investments such as life insurance policies that may require thorough due diligence and involve multi-year commitments.

Parul Maheshwari, a Mumbai based mutual fund distributor says, “Since units are allotted only when fund house receives money, if investing in ELSS, cheque at this point may not work. Use payment methods like NEFT, UPI or net banking to pay money.” If you are switching from a liquid, ultra-short fund, make sure to do it by March 30 before the cut off time, she adds.

Conservative investors may consider investing in PPF or SSY depending on their financial goals. These can also be done online through India Post Payment Bank Account, if you have accounts in a post office. If you are too busy and looking for something with a relatively shorter lock-in, then consider investing in tax saving bank fixed deposits with five-year lock-in.

You may also contribute Rs 50,000 to your account in National Pension Scheme and enjoy tax benefits under section 80CCD(1B). If you buy health insurance then the premium paid up to Rs 25,000 for self and family is also deductible under section 80D of the Income Tax Act. In case you are paying for your parent’s health insurance then Rs 25,000 can be claimed. In the case of senior citizens, these limits stand doubled to Rs 50,000 each.

Moneycontrol PF Team
Tags: #invest #Tax
first published: Mar 29, 2022 06:20 pm