IT/ITeS employees show no effort towards tax planning

The Annual Tax Survey by Right Horizons, an investment advisory and wealth management firm, shows that financial planning among salaried individuals is by and large conspicuous by its absence.

The survey was conducted among 1,169 salaried individuals from the IT/ITeS segment in the age group of 22–54 years across the cities of Bangalore, Chennai and Hyderabad. A detailed analysis on the usage of various tax saving instruments was done based on the data collected.

The survey revealed that, though life insurance is one of the key elements of personal financial planning, 36 per cent of the respondents did not have any kind of life insurance in Hyderabad.

On the medical insurance front, the picture is even bleaker. Nearly 70 per cent of those surveyed did not have any medical insurance and about 18 per cent only had medical insurance cover provided by their employers. In other words, only about 12 per cent of those surveyed chose to have voluntary medical insurance cover, Right Horizons stated in a press release.

Investments under Section 80C earn tax breaks for investors, up to a maximum investment limit of Rs 1 lakh. But more than 60 per cent had not fully utilised the limit of Rs 1 lakh and many of them actually went on to pay income tax, which could have been saved through better financial / tax planning. On the other hand, 34 per cent of the respondents in Hyderabad completely used the Rs 1 lakh limit.

Other interesting findings include the fact that 11 per cent of the respondents in Hyderabad used only Provident Fund (PF) investments, among the various tax saving options available.

Given that PF is a mandatory investment in most corporates, it indicates that most, if not all of them, actually made no effort towards tax planning. Exposure to home loans was also low among the respondents with only 18 per cent of those surveyed featuring it in their portfolio of tax saving instruments.