Sometime this month, many of us will get an intimation from the HR/finance departments to submit proofs of various investments so as to avail of tax benefits.
(For those readers who are unfamiliar with what this means, I include a brief explanation. In India, as per the current income tax laws, one can get a tax deduction on upto Rs. 1 lakh, over and above standard deductions. Standard deductions exempt approximately the first one lakh of the income from income tax, slightly more if you are a woman or a senior citizen. The one lakh that I am talking about is over and above that. All you need to do is show that you have invested an amount upto one lakh into certain specified instruments and that amount is taken off from your taxable income. For more details on the instruments comprising this list, read
http://in.biz.yahoo.com/071126/93/6ocdz.html).
So if you have'nt done it yet, invest right away and save tax. Better to do it now, than to rush to do it in the last week of March (plus you lose 3 months for your money to grow). And best of all, when your company deducts the correct amount of tax at source from you (as a result of correctly factoring in all your investments and exemptions), you don't need to wait for a tax refund from the income tax department as well.
DISCLAIMER: I am not a certified financial professional. You are advised to verify all details regarding investment schemes, taxation laws, etc. from certified sources. The intent of this blog is to talk about the values and attitudes related to money management.
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