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Money Matters

Top Mistakes you Must Avoid While Investing to Save Income Tax | YES BANK

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Savings are the foundations of financial well-being. But often taxes consume a significant part of your income, leaving little to save for the future. However, it is possible to minimise income tax by using tax-efficient investment strategies. The Income Tax Act, 1961 allows you to invest in several tax-saving instruments to reduce the tax burden. Even after these exemptions, many people still falter and make certain financial mistakes while investing.

Top mistakes you must avoid while investing to save income tax:

  • Not taking a holistic view: When investing to save for taxes, it is important to take a holistic view rather than only look at the tax exemption amount. You must understand your financial needs and requirements and assess how much money you have left to invest after meeting all obligations. You should choose investments that offer tax-exemptions but also cater to your financial situation and are within your budget. Make decisions according to your financial aspirations and not under peer influence.

  • Inefficient use of Section 80C exemptions: Another common mistake that you must avoid is to not explore all your tax-saving investments options under Section 80C and related sections of the Income Tax Act. Section 80C, 80CCD, 80G, 80D, etc. offer various tax exemptions for investments made in fixed deposits (FDs), Unit Linked Insurance Plan (ULIP), Equity-Linked Saving Scheme (ELSS), health insurance, National Saving Certificates, charitable contributions, etc. Speak to a professional tax consultant to know all your income tax saving options and then choose the ones which best fits your financial agenda.

  • Investing all funds in one option: Often shortage of time would tempt you to go for what is easily available. However, these doorstep choices are not the ideal one in terms of risk and rewards. Hence, placing all your money in just one option could often lead to a lop-sided portfolio. This approach comprises on your financial needs, risk appetite and investment goals.

  • Overlooking future commitments: It is critical to make investment decisions driven by your needs and your future requirements and not by current trend or peer influence. For example, if a friend is investing in insurance for the family, it does not necessarily make insurance the ideal investment choice for you too. Similarly, in the case of Public Provident Fund (PPF) and National Pension Scheme (NPS), these investments will require you to contribute annually, which could cause a financial strain if they are not in alignment with your goals.

So, be wise and choose worthy tax-saving investments.

Tax-Saving Instruments from YES BANK

YES BANK offers you a variety of reliable, income tax-saving options to choose from according to your monetary needs. These include:

  • YES BANK FDs: With YES BANK FDs, you can be assured of the safety of your funds and earn attractive interests and enjoy tax exemptions. YES BANK’s five years tax-free FDs offer tax exemptions under Section 80C. Moreover, with no impact of the constantly-changing market conditions on your returns, you will be able to safely accumulate wealth over time. The bank also provides higher returns for senior citizens. 

  • YES BANK ULIPs: By opting for YES BANK’s specially-designed ULIPs, you can achieve your financial goal faster and also get tax deductions. ULIPs also offer insurance protection for you and your family.

  • YES BANK ELSS: YES BANK ELSS schemes offer you higher returns over the long-term and are available with the lowest lock-in period of three years. Moreover, ELSS funds allow you to diversify across several mutual funds to earn better returns and minimise risk in the long-run.

Visit YES BANK's website to know more about their Fixed Deposit & Digital Savings Account


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