Mistakes to Avoid When Investing in Tax-Saving Plans

6 Mistakes to Avoid When Investing in Tax-Saving Plans

Avoid tax-saving mistakes like last-minute investments, miscalculating taxable income, and choosing the wrong plans. Plan wisely for better returns.

Written by : Knowledge Centre Team

2026-01-07

3555 Views

15 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Income tax is one of the major forms of direct taxes levied by the government of India under the regulatory guidelines of Central Board of Direct Taxes (CBDT). This tax is imposed on income generated by individual persons. For salaried persons, income tax is levied on the earnest monthly salary and varies from one taxable slab to another. Section 80C of the Income Tax Act, 1961 allows deductions for specific investments which taxpayers take up for the purpose of saving taxes. However, while planning to invest in income tax saving plans and schemes, there are some common mistakes that taxpayers tend to make.

Maximize Your Tax Savings - Talk to an Expert

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

These mistakes can cost you more than you’d expect and must be avoided:

Mistake 1:- Delaying your investments in the last quarter

Making systematic investments over a period of time are important for building a good investment portfolio. People tend to hurry and take last moment decisions to invest their money to save tax; little do they know that these last moment investments hinder you from reaping its full benefits. Therefore, it is ideal to start investing early on, starting from the beginning of a financial year to create a diversified investment portfolio.

Mistake 2:- Not calculating your taxable income

It is the right thing to calculate your tax liability and Income tax on the salary, but you should also remember that there are various other incomes like business income, interest on deposits, mutual funds, capital gains from stocks, rent from property, gold etc. If you do not calculate your taxable income properly beforehand, you will not know exactly how much deductions you need to aim to reduce your payable taxes.

Mistake 3:- Not choosing your insurance properly

Most buy life insurance plans in a bid to meet Section 80C requirements. However, many people end up having too much invested in endowment and ULIPs but without being aware of the benefits they actually have. However, the primary objective of buying an insurance policy must be to protect yourself and your family financially in case of an unfortunate incident. For instance, the iSelect Smart360 Term Plan by Canara HSBC Life Insurance offers options like Whole life cover and limited pay options along with Tax benefits.

Benefits of Life Insruance

Mistake 4:- Not taking into account tax-exempted expenses

All salaried individuals receive a standard deduction of Rs.50,000 as per Income tax Act, 1961 and if they are paying school tuition fees for two children, house rent, or home loan principal and interest are also eligible exemptions/ deduction on account of the same as per Income Tax Act, 1961 subject to conditions provided therein. Hence, it is important to make informed decisions and figure out how much you have already saved before you look for any further adjustments in your income. Other thing you can consider is EPF, which is deducted by your employer as your own contribution.

Mistake 5:- Not knowing the rate of returns

Taxpayers usually do not know the exact returns offered by various investment avenues. Know your return options and invest accordingly. If you have a good risk appetite, you could consider ELSS or ULIPs. Before investing, make it a point to analyzing possible alternatives and not invest abruptly. Look for getting better returns, instead of focusing merely on saving taxes.

Tax-Saving Investments Basis Rate of Return:

  1. High-risk, high-return investment: Example: ULIPs provide dual benefit of an insurance coverage, and savings with flexible investment options.
  2. Low-risk, lump-sum investment: Example: PPF lets you deposit regular amounts for a long-term for a fixed rate of interest.

Click here to use - Investment Calculator

Investment Calculator
Our investment calculator can easily help you plan the needed financial corpus for your goals.
1
My Goal
2
Investment Amount
3
Additional Details
4
Our Recommendation
My Goal
Investment Amount
Additional Details
Our Recommendation
Goal
saving
Corpus Created in {corpusYear} year
you Invest {investAmount} over {totalYear} Years
0 year
₹ 1.20Lakh
1 year
₹ 1.20Lakh
2 year
₹ 1.20Lakh
8 year
₹ 1.20Lakh
9 year
₹ 1.20Lakh
10 year
₹ 1.20Lakh
Hi {name}, We recommend to start investing
per month for {totalYear} years
Invest Now
Desclaimer-

The above calculation and illustration of figures are indicative only and not on actual basis.

Mistake 6:– Not aligning your investments with your financial goals:

While looking for tax saving instruments, do not invest in a financial product only for the purpose of tax planning. Consider factors like your family’s needs, your long term financial goals and your life stage based requirements, to evaluate and find a plan that aligns with all your goals. For instance, if you are a young and unmarried, you might want to accumulate money in the near future to meet specific goals like marriage, a lavish trip etc. In this case, you shall opt for options with shorter maturity and easy liquidity options. However, if you are married and are planning kids, you might want to opt for investments with a longer period of maturity, keeping your children’s future expenses in mind. The Guaranteed Savings Plan by Canara HSBC Life Insurance offers guaranteed benefits along with the flexibility to choose your savings horizon, to meet your specific life goal.

Also Read - Goal-based investing

Tax saving can get confusing and may seem tiresome at times. However, it is important to ensure your hard earned money is put in the right places. So, research and plan thoroughly before making investments to gain the maximum and more relevant returns.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

Dividend Tax Explained: Dividend Distribution Tax in India
18 Feb '26
1105 Views
8 minute read
Understand what dividend distribution tax(DDT) is, how dividend tax works in India, who pays dividend tax, and how it is taxed under income tax laws.
Read More
Tax Saving
Income Tax Act 1961: Overview, Key Provisions and Applicability
17 Feb '26
1177 Views
12 minute read
Learn about the Income Tax Act 1961, its purpose, key provisions, applicability, and how it governs income tax laws in India.
Read More
Tax Saving
Types of Allowances in Salary: Definition, and Taxation Rules
11 Feb '26
1206 Views
6 minute read
Learn about various allowances like HRA, travel, medical, and special allowances, and understand their tax treatment and exemptions to optimise salary taxation.
Read More
Tax Saving
Penalty for Late Filing of Income Tax Returns (ITR) in 2026
11 Feb '26
1133 Views
7 minute read
Avoid penalties for late ITR filing! Learn about the financial and legal implications of missing deadlines and how to file on time.
Read More
Tax Saving
HUF Taxation Explained: Benefits, Rules & How to Save Tax
11 Feb '26
112 Views
7 minute read
Learn how HUF taxation works in India, eligibility rules, tax benefits, deductions, and how Hindu Undivided Families can save income tax legally.
Read More
Tax Saving
What is IGST? Meaning, Rates and Calculation Explained
11 Feb '26
210 Views
7 minute read
Understand IGST, its full form, when it applies, current rates, and how to calculate Integrated GST for inter-state transactions in India.
Read More
Tax Saving
What is CGST? Meaning, Rates & Features Explained
11 Feb '26
160 Views
7 minute read
Learn what CGST means, its full form, key features, tax rates, and how Central GST is applied under India’s GST framework.
Read More
Tax Saving
Income Tax Rebate in India: Rules, Limits and Eligibility
10 Feb '26
1939 Views
8 minute read
Get money back with Income Tax Rebate! Learn what an income tax rebate is, who is eligible, applicable sections, limits, and how taxpayers in India can claim the rebate.
Read More
Tax Saving
Tax Collected at Source (TCS): Payment, Exemption & Rates
10 Feb '26
1059 Views
7 minute read
Learn about Tax Collected at Source (TCS), payment exemptions, and rates. Explore key details with Canara HSBC Life Insurance for smarter tax planning insights.
Read More
Tax Saving

Tax Savings - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness