This is that time of the year when we run helter skelter looking to make investments which will lessen our Income Tax burden. The propensity to do everything at the last moment is manifest here as well. We all make investments, not just for tax benefits, but for providing for the future as well as for making profit on the sly. And sometimes, we end up making investments more than the allowable limit. We do not enjoy the tax benefits of the additional investments we make.
I feel the Government should create an Investments for Tax pool where taxpayers’ excess contributions could be stored for gaining future tax benefits. In a lean year, when the taxpayer is not able to achieve the maximum allowable limit, he/she could draw from this pool and claim the benefit. The pool is reduced to that extent and can be replenished by adding to in future for claiming benefits. The Government could draw up a list of investments that are eligible to qualify for the tax pool. The Government could allow the excess contributions but the additional tax saved could be separated into a tax credit to be adjusted against future tax liabilities. It’s a win-win situation for the Government as well as for the hardworking taxpayer.
Sounds good, eh?