Tax is an important matter – be it making tax-saving investments, depositing tax payable on time or timely filing of Income Tax Return (ITR).
Tax is an important matter – be it making tax-saving investments, depositing tax payable on time or timely filing of Income Tax Return (ITR).
If a taxpayer doesn’t deposit tax on time, the person ends up paying interest on the outstanding amount of tax payable, and may also attract penal provisions if huge amount of tax remains payable.
Similarly, in case the ITR is not filed within the due date, a taxpayer has to pay late fee, apart from paying more interest on tax payable, if any, for the delay. In case of any error in filing the return of income, an assessee may not get enough time to revise the return, if filed at the fag end of an Assessment Year.
While there are deadlines for depositing tax and filing ITR, people become more casual in making tax-saving investments as there is no such investment deadline to attract penalties etc.
So, many people wait for the fag end of a financial year to complete their tax-saving investments and in the process either make mistakes in choosing appropriate investment instruments or end up paying higher tax by missing the deadline.
As tax-saving investments are generally long-term investments, so a person needs to do proper planning before making the long-term commitment.
However, by waiting for the last moment to make investments, most people end up just saving tax, but miss the opportunity to meet the long-term financial goals through proper investments.
“Most people end up picking up the first tax-saving investment that is in front of them or completely ignore any tax planning. Some feel that saving a small amount of tax blocking large capital is not a good idea, without realising that over time these ‘forceful’ savings will lead to a sizeable amount. Among the common mistakes are delaying tax planning to the last few months of the year, investing in low yielding instruments, excess planning and not taking complete advantage of rebates and deductions,” said Vikas Singhania, CEO, TradeSmart.
The Spuzz is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.