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Common tax planning mistakes to avoid for a stress-free financial year 2022-23

Avoid common tax planning mistakes for a stress-free FY 2022-23.

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Tax planning is an essential aspect of managing finances, especially during the final phase of the financial year 2022-23. To avoid any last-minute hassle and save tax, it is imperative to plan ahead. However, some common mistakes can hamper the process of effective tax planning.

One such mistake is investing without knowing current expenses. It is crucial to have a proper plan before investing to get a rebate of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. Failing to do so can lead to financial difficulties later.

The budget 2023 has also made it clear that investing in an insurance policy with a premium of more than Rs 5 lakh per annum will not provide tax exemption. Therefore, individuals investing for tax exemptions must ensure that they invest in a policy with a premium of less than Rs 5 lakh.

Using a credit card for tax exemptions is another common mistake that individuals make. It is essential to avoid this as it may lead to increased debt, which can become difficult to manage.

Lastly, it is also advisable to avoid doing tax planning in the last month of the financial year to avoid financial pressure at the end. This will allow individuals to plan effectively and save tax without any stress.

Individuals must keep in mind about these common tax planning mistakes and avoid them to ensure effective tax planning and a stress-free financial year ahead.

Read more: Financial Rule: How the 4 percent withdrawal rule of finance can be the right strategy for you, check details

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