If you are planning to save taxes and you are already in the month of March YOU ARE LATE but you have not missed the bus. So what can you do now, not taking any wrong decision is the best you can do in this month. In the month of March advisor/agents sell any product which earns then huge commissions not thinking about the client, as they know that the client is ready to invest in any product that is pitched to them with a tax saving benefit.
What should you look for in an investment/product before buying it….
The first thing you should see is that the product/Investment should have a Secondary benefit of saving taxes and not primary. In case the product is sold to you only for the sole purpose of tax saving that means the product has no other benefits, which makes the product/Investment worthless. Never Investment or buy a product only for tax savings.
The second thing you should see is, will you buy the product/ invest even if the product does not give the tax benefit. If the answer is NO, the product is not for you. Similar to the above point, tax saving should be a by-product of the Investment and not the only purpose.
As per the income tax act Section 80C and Section 80D are the major tax saving sections. There are other sections of the act which help in saving taxes but the above 2 sections are the major sources of tax saving.
A standard way of saving taxes under section 80C, investing in ELSS (tax saving mutual fund), depositing money in a PPF a/c, buying a life insurance, investing in other traditional insurance schemes.
Buying a health insurance is the only way of saving taxes under section 80D.
Above sections as well as other sections where you can save taxes will be discussed in detail in the coming blogs….
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