March 31 investment deadline: Rushing to invest in tax-saving instruments? Here's why it may not be a good idea
tax-saving instruments such as PPF, NPS, insurance, tax-saving fixed deposits and ELSS funds, among others. These investment options enable tax payers to claim income tax exemption up to ₹1.50 lakh under section 80C of the Income Tax Act, 1961. An income tax exemption enables tax payer to avoid paying tax on that income.
An exemption of ₹1.50 lakh means you save ₹15,000 of your income if you fall in the 10 percent tax bracket, ₹30,000 if you fall in the 20 percent tax bracket, and ₹45,000 when you are in 30 percent tax bracket (excluding cess and surcharge). ALSO READ: Mutual fund investors have a reason to cheer as the accounts won't get blocked on breaching March 31 deadline In order to claim income tax exemption, it is vital to invest in a financial instrument during the same fiscal year. This means if you want to avail income tax exemption for 2023-24, you must invest before the March 31 deadline.
This leads to a rush for investments by investors. Investing in any equity-oriented tax-saving instrument such as ELSS requires the financial markets to remain open on that day for obvious reasons. So, there is no way to invest in these schemes any longer in order to claim income tax exemption for this fiscal year which is ending on March 31 i.e., tomorrow.
Nevertheless, taxpayers can claim exemptions by investing in other non-equity schemes such as PPF, SSY, tax-free fixed deposits, NPS, insurance, among others. However, financial experts do not recommend investing on the last date. “If you invest in financial instruments on the last day to save taxes then there is a possibility that you may end up buying such products that may not help you to create long-term wealth such as traditional insurance policies, NSCs or 5-year
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