Think income tax and your mind will conjure up an image that is decidedly unpleasant. Filing faux pas, cumbersome calculations and nightmarish notices are just some of the traumatising examples. Have you ever wondered why it is always so? The tax-saving laws became simpler decades ago, and with e-filing, you no longer have to take a day's leave from work to submit your return.
The problem is the taxpayer himself. We choose to be ignorant, lazy and gullible. Proving this is a recent IMRB International-ICICI Prudential survey on tax behaviour. A shocking 50% of respondents were unaware of the maximum exemption for each taxsaving option.
Life insurance was the only redeeming factor as about 60% knew about the maximum limit of Rs 1 lakh. In terms of awareness about tax benefits from various investment options, Ulips topped the list but with an unimpressive 54%. There was no saving grace for taxpayers even when it came to the traditional favourite, PPF-only 16% people knew that its interest is tax-free.
This makes a convincing case for our compendium on tax saving. Though the advice is evergreen, the need for a comprehensive plan is accentuated by the slowdown that has demolished hopes of any growth in our incomes this year. So in addition to the explanations of the provisions of Section 80C, we have constructed tax-efficient strategies for several categories of taxpayers. Now, you have no excuse to gift away more tax than is necessary to the government's coffers.
Investments still led by traditional tax-savers
|Figures are % of respondents who invested in these taxsavings options in the past two years. The figures will not add up to 100 as investments had multiple options.|
|Source: Survey done for ICICI Prudential Life Insurance by the IMRB in October 2008|