new Delhi. If you have not yet filed Income Tax Return, then its last date is approaching. 31st March 2022 is the last date for filing returns. Till this period, the belated ITR can be filled along with the deposit. If you do not file ITR till this period, then the Income Tax Department can also take action against you.
Apart from this, those who have not yet done tax planning for the current financial year, they must be doing so at the last moment. Although tax planning is a year-long activity, many people become aware of it only when the financial year comes to an end. This strategy is wrong as there is also a possibility of mistakes in tax planning at the last minute. Let us know about some such mistakes, which should be avoided.
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Lack of knowledge of tax liabilities
Before doing tax planning, it is important to know how much your tax liability is. To know about the tax liabilities, first of all it is important to know about your total income and your tax slab. There are many sources of income – salary, business, interest on deposits, capital gains on selling stocks or mutual funds, gifts etc. However, not every income is taxable.
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Stay updated about investment returns
Always be updated about the annual rate of return of your tax saving option. Make sure to match it with the publicly available information about that option. Knowing about returns will help you to know how helpful it is to save tax by investing in it. Is this option beneficial or not, or there is a need to shift to some other option.
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There are many ways to save tax and these include insurance. However, buying a policy just for tax saving purposes can lead to a lack of adequate life cover and not acceptable investment returns. Therefore, before buying life insurance, try to find out the coverage according to the need of your family.
Focus only on saving tax
When doing tax planning, focusing only on tax saving and ignoring investments will block your corpus. Financial goals, wealth creation, availability of liquidity to meet emergency situations and adequate health and life insurance are essential along with a good tax saving plan. Also, remember not to sign any investment form without reading the terms and conditions, risk, lock-in period and investment cost.
Tags: income tax, Income Tax Planning, Investment, ITR
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