Do I really need to make extra investments just to save tax?

POSTED BY Dr.Sachin ON October 7, 2013 12:54 pm COMMENTS (8)

I was just working on the tax saving ideas for this current financial year. Then the above question came to my mind. ie. Do I really need to make extra investments just to save tax?

Ok. I shall explain. (numbers just representative)

Suppose myself is a doctor/medical representative. Annual Income: 3,84,000. I guess with this annual income i should fall in the 10% tax slab. Adding up all the insurance premium payments, mutual funds SIP payments(tax saving SIPs), medical insurance premium payments etc it comes to 84,000 only, for the current financial year. I meant, all the deuctions I can make is 84,000 only. And if I want to save tax for the remaining 1,00,000 , ( I guess any income above 2,00,000 is taxable) I need to invest in PPF or NSCs etc. So that I can save 10,000 (ie. tax on 1,00,000).

But if I do overtime for few days, that will fetch me 10,000 in my hands.(To be frank and fair, this overtime payment will not be counted for tax.)

So i was just thiniking, which one is better? Work over time for few days and get that 10,000 directly to your hand or invest 1,00,000 in NSCs or PPF and save tax?
ok.Im sharing this here just to know whether im wrong in any of the calculation. Kindly help.


8 replies on this article “Do I really need to make extra investments just to save tax?”

  1. ashalanshu says:

    Dear Dr. Sachin, please chedck below discussion also.

    jagoinvestor. com/forum/finacial-planning-faqs



  2. Lakshmipathy G says:


    I have heard of Behavioral Finance. You question reminded me it. You can have a look.

    1. Dr.Sachin says:

      Thanks Lakshmipathy G
      The pdf you forwarded is really worth a read. I advise everyone to go though the same who put forward weird questions like mine 😀

  3. ashalanshu says:

    Dear Dr. Sachin, you question is not weird. it does has merits. At the end of the day, it’s your personal call. what do you want to do with your money. If Saving Tax is your priority, do so. Do remember against 10% saved Tax amount, another 90% money (actually 100%) money ‘ll be locked for at least 3Y to 15-20-25Y depending upon the tax saving instruments selected by you.



  4. Dr.Sachin says:

    Still Im in dilemma. I mean do we people really make investments just to save tax.?
    Or do extra time work and make extra earning? ( do my question really look weird? Might be cos Im a newbie)

  5. ashalanshu says:

    Dear Dr. Sachin, how is it possible that Overtime is not taxable? Are you receiving it in cash with out mentioing in your Form 16. In that case it’s black money for you if not reported in your income.

    Think over it.



    1. Dr.Sachin says:

      Thanks dear Ashal,
      You really opened my eyes. The extra earnings too is taxable. Correct.

  6. Anshuk Jain says:

    I will say both. Work overtime and save more. 🙂

    If you have already invested 84,000, you will be able to invest 16,000 more only to be eligible for 80C deduction.. which would mean 1600 of savings only..

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