A survey of more than a 1,000 plus salaried IT/ITES taxpayers has revealed interesting facts about how they plan their taxes, medical insurance, life insurance and investments.
The most interesting and shocking revelation from this survey is that 95 per cent of the respondents, having an average age of 26 years, did not invest in medical insurance.
On this front, it was found that almost half of the respondents were not covered by medical insurance at all.
Even among the ones that were covered under medical insurance, most of them were covered because their employers deducted premium at source.
Only 5 per cent invested in medical insurance on their own, although complete tax deduction under section 80D is available for premium payment up to Rs15,000 (Rs 20,000 for senior citizens).
While 81 per cent of them did not utilise full tax benefits under Section 80C as less as 5 per cent invested their money in tax-saving equity linked saving schemes or ELSS as they are popularly known.
The survey undertaken by Right Horizons, an investment advisory and wealth management firm based in Bangalore, was spread across the BPO hubs in Bangalore, Chennai and Hyderabad.
Among persons using partial tax savings, the survey observes, company PF accounted for 30 per cent in value terms. Apart from PF, 65 per cent of the value of investments was in 'traditional / safe' instruments like PPF, NSC, and life insurance, observes the survey.
Interestingly, for all the talk about the mutual fund revolution sweeping across the country, only 5 per cent of the value of investments of this sample data was in the tax saving ELSS funds.
As per the current income tax rules, tax benefit under section 80C is available for investments up to Rs 1,00,000 in instruments like PF, PPF, NSC, principal repayment of home loan, life insurance, ELSS etc with no individual ceiling among these avenues.
Mr Anil Rego, CEO, Right Horizons, said, "It is noteworthy that a conservative mindset prevails even among the 'most evolved' of the salaried class and their influencing community. Though retail investment in mutual funds is growing, it still has a long way to go before it catches up with traditional avenues".
Another key finding from the survey was that more than 40 per cent (most of these from the 21-30 age group) respondents did not use life insurance as an instrument of tax saving at all.