Skip to main content

Insurance Plans to Save Tax - Do not Rush to Invest

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

Investments should be made only after evaluating the return on investment scenario, including potential tax gains


You hardly have two weeks to finalise your tax saving plan before the deadline on March 31. If financial advisors are to be believed, many individuals think of tax planning only in the last two weeks of the month of March. They also quickly add that these individuals often fall for unscrupulous tactics of their insurance agents or personal bankers. It is only much later that they realise the folly of buying wrong products.


Many people look at such investments merely as tax-saving tools. Also, as they have very little time to evaluate the product features, they are bound to make mistakes. The right approach is to make investments that are suitable for you, after you evaluate them from a return on investment perspective, including the potential tax benefits. In other words, the obsession with preventing the tax dent on your savings could, in fact, cause long-term harm to your finances. If you are in this group, here are some tips that may help to avoid some common mistakes this year.


IGNORING ELIGIBLE TAX BREAKS


Thanks to extensive campaigns and incessant calls from distributors, most tax payers are aware of the tax deduction of up to . 1 lakh that they can claim under Section 80C. Most individual focus entirely on this deduction and overlook other investments or expenses that qualify for tax breaks. For example, many people don't include Employees Provident Fund (EPF) contribution or tuition fees paid for their children in their tax planning. Take a look at your salary statement and tax statement given by your company before finalising your tax plan this year. In fact, according to experts, many individuals may not be required to make any large additional investment if they take into account their EPF contribution and life insurance premiums.


Remind yourself that the Income Tax Act provides several other avenues to save taxes. For instance, if you are paid house rent allowance (HRA), but do not pay rent as you live with your parents, you can still claim the deduction. You can enter into an agreement with your parents and pay the rent. However, remember, the amount will be treated as their income. Moreover, you can also avail of deduction up to . 15,000 (. 20,000 in case of senior citizens) under Section 80D if you are paying your parents' health insurance premium.
You can even claim tax breaks on your expenses on preventive health check-up for yourself and family. Although it is a part of section 80D, this deduction deserves a special mention as it was introduced only this year. If you have receipts of any preventive health check-up expenses undergone this year, make sure you preserve them. This year onwards, such check-ups will earn you deductions of up to . 5,000. Since this is a new tax-saving avenue, introduced in last year's Budget, many people may not be aware of this deduction.


THE LURE OF COUNTLESS INSURANCE POLICIES


If you look at the portfolio of most individuals who subscribe to last minute tax planning, you would really think that buying life insurance policies is their favourite pass time. In fact, many of these individuals fall for the sales pitch of "tax saving plus insurance cover plus return". Remember, buying a life insurance policy is not a one-time affair, unless it is a single premium policy. It may help you save taxes this year, but you will have to shell out the premium every year for the next 10-20 years. If you fail to pay the premiums on time, your policy will lapse depriving your family of the life cover.


Besides, it is a long-term product which will yield decent returns only after, say, 10 years. Therefore, if you surrender it after the mandatory lock-in period of five years, you may not get a satisfactory corpus. If you have dependants, go for a term policy. It will provide a large sum assured at a very reasonable cost, in addition to tax benefits. However, in case you are convinced about the insurance-cum-investment policies, buy them only if you are confident of paying premiums every year.


FAILING TO MAXIMISE RETURNS


Public provident fund (PPF) --- one of the favourites with tax-payers ---is widely accepted as an ideal retirement planning tool for conservative individuals. After all, it fetches a tax-free return of 8.8% today. However, many make the mistake of investing money into PPF at the last minute. If you do so, you lose the opportunity of maximising the return. If you want to maximise returns from PPF, ensure that you invest before the 5th of every month to earn interest for that month.


If you are putting a lump sum amount in tax saving mutual fund schemes, or ELSS, this year, you could remember this principle next year. If you open a systematic investment plan in an ELSS in the beginning of the month, you will benefit from averaging of your purchase cost and it will help you maximise your returns.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Term insurance

Term insurance may not be the most-marketed product by life cos, but it’s a must-have in today’s risk-prone lifestyle WHEN was the last time your insurance agent sold a term plan to you? It’s not a very popular policy among agents, as their commission in absolute terms is low because of the low-premium. Just as agents have their self interests in mind while selling, you need to make your own decision about your insurance needs, which are unique to your family. COST ADVANTAGE A term plan is pure protection. It is the cheapest type of life insurance policy. But what you see might not be what you get, most insurers have a range of health parameters for standard rates. If any of your health parameters — weight, blood pressure for instance fall outside this range, you will pay more. For some companies, the standard range is very narrow. EARLY BIRD GAINS A 30-year-old will pay 15% more premium than a 25-year-old. At 40, the premium is double of what is applicable for a 25-year old, points...
Read more

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...
Read more

Reliance Life Insurance company introduces 17 ULIPs

Reliance Life Insurance company has announced the launch 17 unit linked insurance plans (Ulip). The new range of Ulips encompasses several categories including child plans, pension, protection, savings and investment, which are available in two versions — basic plan with tenure of over 15 years and another with a 10-year-term. According to an official release, these Ulips are primarily targeted at customers paying a premium of over Rs 10,000. All these schemes come with features such as capital guarantee, loyalty additions, higher internal rate of return and several fund options. The plans also offer riders, including payment of lump sum on diagnosis of specified critical illnesses, surgeries and additional life cover. Policyholders have the option of choosing between automatic asset allocation, systematic transfer plan and return shield options. Recently, the company launched two traditional insurance plans — Reliance Jan Samriddhi plan (RJSP) and Reliance Traditional Super InvestAssu...
Read more

TDS Rate and Personal Account Number(PAN)

    The TDS rate doubles to 20% from 10% if you fail to mention your Personal Account Number   IF you run a glance through your pay slip, you will come across something called TDS, which is tax deduction at source. In most cases, the employer deducts this amount at the time of payment of salary itself and pays the total tax amount to the government on behalf of all the employees. If you are a self- employed or practicing professional s, you have to pay this amount yourself.    Tax deducted at source is one of the modes of income tax collection by the government. Under the income-tax laws, income tax at specified rates is required to be deducted while making certain payments.    The rate of deduction of tax at source on interest and rent payment is 10%. For salary payments, the employers deduct income tax at source on a monthly basis after computing income tax liability on estimated annual taxable income of the employee. Tax benefits on housing loan, investments, etc are consid...
Read more

L&T Tax Advantage

Best SIP Funds to Invest Online   The fund follows a growth approach to investing in quality stocks that have a large-cap tilt This large-cap tilted ELSS has fared consistently and fared better than its benchmark by posting a higher margin of outperformance. The fund follows a growth approach to investing in quality stocks that have a large-cap tilt, which is evident in its portfolio. The portfolio is further well diversified across market capitalisation and sectors with over 60 stocks finding a place in it. The upside with this fund is the fact that it has witnessed both down and up cycles of the market to come across as a winner in the long run. Do not doubt the fund based on its size and a few mediocre years of performance, because when analysing its rolling three year returns, the fund's performance stands out to qualify as a must have ELSS in one's portfolio. Stay invested through the lock-in and there are chances of benefiting from returns as well as tax savings will prov...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now