ONE of the major problems that are faced by individuals as they enter the last few weeks of the financial year is the manner in which they will actually gather the amount for the tax saving investments.
A lot of intent is shown at the start of the financial year but whenever there is no regularity built into the process then there is a pressure built up towards the end of the financial year.
Here is a look some amounts that can be collected and used for the purpose of the investment at this critical juncture.
Nature of investment: Every individual wants to invest for the purpose of tax saving under Section 80C which provides a deduction up to Rs 1,00,000 for specified investments and Section 80CCF which provides deduction for investment into infrastructure bonds.
One of the main things that have to be known is that there is no mention about the nature of the amount that has to be invested. This means that there is no compulsion that the amount has to come from taxable income earned during the year.
The amount thus can come from both taxable as well as non-taxable sources for the individual.
Extra amounts: The first place that the individual has to concentrate on is the bank accounts that they hold. Often there are some amounts that are lying in the bank, which is not being put to use and these are the figures that will be very useful in funds crunch.
If there is a slightly larger amount in some savings account then this should be used effectively. But in some cases the individual should ensure that small amounts from multiple accounts are brought together for completion of the investment.
Salary or regular income: One source of income that can play a part is the salary received by those who are employed. The date on which the salary is received will play an important role as if this is received on the last day of the month then this also gives an investment opportunity out of the amount received in March. Apart from this there is still the salary for the month of February that will come in and the utmost effort has to be made to ensure that the maximum amount out of this is used for complet ing the investments.
For those who are profes sional the income that comes in during the re maining time period of the financial year has to be used mainly for this purpose.
One time receipts: There are also several receipts that might not be recurring but are received only once and should also be put to use.
This can include sums like a bonus that has been received from the employer or it could be some interest on some other investment that has come in.
All these figures need to be considered and added up so that they contribute to the total amount that is required for completion of the tax saving investments.
Maturity: In case there is not enough cash that is available for the purpose of the investment then they should look around for deposits or other investments that are maturing because these can be put to good use. If previous last minute investments have been made in March in some of these instruments then their maturity will also be at this time period.
This kind of effort will ensure that there is some amount that has been collected and this will help in completing the requirements. There are a variety of areas from which such amounts will be available and this will include deposits and even bonds from previous investments that have matured now and this makes the amounts available for investments.
Tax-free income: There can be some income earned by the individual that is tax free in nature. This can include amounts like dividend earned or capital gains earned on shares or equity oriented MFs. Both these earnings are tax free in nature but they can be used for the purpose of making the investments to save tax under these two heads.
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