Every year, with the dawn of the month of March, every taxpayer in India scrambles to balance their financial sheets and look at their tax outflow. Most who have planned across the year are in a comfortable position as most of their tax-saving investments are in place. For others, who waited till the last minute, it is time to go through the financial instruments, calculate the amount of tax to be saved, find the right plan – all in just a few weeks.
 

Leaving things to the last minute is a habit for some, while helplessness for some. But now that March has dawned, it is high time that you find the right tax-saving solution to beat the tax monster.
 

What is Tax Saving?
 

Every tax season, the country's taxpayers have to ensure that they file their returns and pay their share of taxes. However, remember that the Indian Government has provided various provisions that assist taxpayers to pick investment choices, which will reduce the amount they are liable to pay through taxes. 
 

As a taxpayer of the country, you must be concerned with the high amount of the income tax. This is why citizens must learn about the tips to save tax. 
 

A large number of individuals join the workforce annually and get introduced to the world of taxes. Employees should also remember that as their career improves, so does their salary. A higher-income may be subjected to a higher tax rate, which is why it's important to save up much of your hard-earned funds. They must also learn about the different income tax saving tips. Along with this, it is only beneficial that you use the different provisions that the Indian Government has provided to save your income better.
 

However, when the month of March comes with a wake-up call on many of us, many of us are running around trying to find the best ways to save income tax. This is what happens when you push your tax-saving till the last minute.   
 

Why is Last-minute tax saving a problem?

Leaving to the last-minute is generally an ideal way to land in trouble. Moreover, if it's something as important as tax payments, waiting till the last minute can lead to extreme stress. Reasons why waiting till the last-minute for tax is a problem are:
 

1. Greater stress on the finances: A last-minute tax saver will mostly have to be alert during the last few months of the financial year, as most of their income is now allocated towards tax-saving instruments. The issue is compounded by the fact that a huge portion of the income tax is debited during the final quarter of the financial year – i.e., from January to March. 
    

2. Chances of making a mistake: It is not the best idea to rush into something, especially when your entire financial stability is on deck. In an attempt to save tax extremely well, a tax-saver may make rash decisions without considering the consequences and make poor financial decisions. This may involve investing in unsuitable products. For instance, a 25-year-old individual with no liabilities and dependents will probably not require a specific tax-saving plan. However, to save taxes, he may buy an expensive policy at the last minute. 
    

3. Choosing incorrect avenues for investment: When you're testing tax-saving at the last minute, many people seek advice from agents and blindly follow whatever advice they receive. It is important that individuals firstly understand an agent's sales pitch at face value as they may be trying to sell you a plan you do not necessarily require. Along with this, even if the agent is an honest person, they may not have an in-depth understanding of your financial situation. Hence, when making purchases at the last-minute for tax saving, it is important to conduct your own research. 
    

4. Delays in finding and buying a policy: Individuals must understand that purchasing a tax-saving investment is not that simple. There are various methods and procedures involved, and it takes a considerable amount of time. Along with this, individuals must also consider that there may be unexpected delays for different reasons. If you procrastinate in your option of investing in tax saving options until too late, you jeopardize your chances of missing the tax filing deadline. 
    

Why should you start your tax-saving early?

With the help of tax saving, you may protect your income and, at the same time, maintain the income tax requirements expected from you. However, pushing your income tax payments till the last date can be quite harmful to you. Some of the benefits of beginning your tax-saving early include:
 

1. Optimally divide the costs of investment: If you begin planning early, you can easily spread out your cost of making profitable investments. A smart approach to planning will ensure that you don't have to rely on severe measures in January to save as much as tax possible.  
    

2. Helps you plan better for your future: The longer period you do not make a decision, the greater is the possibility you'll miss out on tax savings. Your main objective will then be to invest in plans quickly to save taxes in that year rather than selecting a plan after conducting considerable research. Such a hurried approach will probably lead to you missing out on profitable long-term plans. Hence, when you begin tax-saving early, you may be able to plan for your future in a profitable and much more holistic way.  
    

3. Allows you to make appropriate investments: When deciding on investment products that will help you save on taxes, you must give yourself some time to learn and research the investments you can make. Along with this, starting early with profitable investments allow you to benefit from the potentially high returns rate. 
    

How to save tax with life insurance?
 

Life Insurance is a less-risk tax-saving solution in India. Most importantly, when you buy a life insurance plan, you get the dual benefits of life cover and tax^*-saving. Some plans, like savings-cum-insurance plans or investment-insurance plans, also help you generate wealth and get assured returns on the premium paid, along with life cover.
 

Life insurance plans allow you to save tax^* under three sections of the Indian Income Tax Act:
 

1. Section 80C: The premiums paid towards life insurance plans are tax^*-deductible under Section 80C of the Income Tax Act.
    

2. Section 80D: If you buy certain health-based riders, like critical illness cover, comprehensive health rider^#, etc., with your life cover, you can avail tax^* benefits on the premium paid for the riders.
    

3. Section 10(10D): The maturity payouts and death benefit paid under life insurance plans are exempt from taxation under this Section.
    

However, be careful to go through the prevailing tax norms and rules before investing in any avenue, including life insurance plans.

 

Summing up
 

When you're an individual falling under the income tax bracket, you must plan for your tax payments. Waiting until the last minute leads to you facing a heavy financial burden.
 

However, when you plan ahead, you will be able to make good investments with the right tax-saving tips. 

 

L&C/Advt/2023/Mar/0988