IT employees not tax-savvy: Survey
IT /ITeS employees, in the 22-34 age bracket, are not known for being tax-savvy. Besides, their investment behaviour too is skewed to traditional options like PF and PPF against equity instruments, according to a study conducted by investment advi...
By TNN |
BANGALORE: IT /ITeS employees, in the 22-34 age bracket, are not known for being tax-savvy. Besides, their investment behaviour too is skewed to traditional options like PF and PPF against equity instruments, according to a study conducted by investment advisory and wealth management firm Right Horizons.
Only 19% of employees availed of tax benefits under Section 80 C while the remaining 81% had “partial or no tax-saving investments,” says the study.
The firm conducted the survey with 1,000 employees in the IT/ITeS segment in Bangalore, Chennai and Hyderabad. Tax benefits under section 80 C are available for investments up to Rs 1 lakh in instruments such as PF, PPF, NSC, principal repayment of home loan and life insurance.
Among persons using partial tax savings, company PF accounted for 30% in value terms.
Apart from PF, 65% of the value of investments was in traditional/safe instruments like PPF, NSC and life insurance.
The survey found that only 5% of the value of investments was in mutual funds or the ELSS (Equity Linked Saving Scheme) Fund despite the fact that equity is supposed to generate the highest returns over the long term and ELSS has the smallest lock-in period of 3 years among all tax saving instruments.
“It is noteworthy that a conservative mindset prevails even among the ‘most evolved’ of the salaried class and their influencing community. Though retail investments in mutual funds are growing, it still has a long way to go before it catches up with traditional avenues,” says Right Horizons CEO Anil Rego.
The survey revealed that almost half of the respondents were not covered by medical insurance. Those who were covered under medical insurance were because their employers deduct premium at source. Only 5% invested in medical insurance on their own, although complete tax deduction under section 80D is available for premium payment up to Rs 15,000. Another finding was that over 40% respondents did not use life insurance as an instrument of tax saving at all.
Only 19% of employees availed of tax benefits under Section 80 C while the remaining 81% had “partial or no tax-saving investments,” says the study.
The firm conducted the survey with 1,000 employees in the IT/ITeS segment in Bangalore, Chennai and Hyderabad. Tax benefits under section 80 C are available for investments up to Rs 1 lakh in instruments such as PF, PPF, NSC, principal repayment of home loan and life insurance.
Among persons using partial tax savings, company PF accounted for 30% in value terms.
Apart from PF, 65% of the value of investments was in traditional/safe instruments like PPF, NSC and life insurance.
The survey found that only 5% of the value of investments was in mutual funds or the ELSS (Equity Linked Saving Scheme) Fund despite the fact that equity is supposed to generate the highest returns over the long term and ELSS has the smallest lock-in period of 3 years among all tax saving instruments.
ADVERTISEMENT
“It is noteworthy that a conservative mindset prevails even among the ‘most evolved’ of the salaried class and their influencing community. Though retail investments in mutual funds are growing, it still has a long way to go before it catches up with traditional avenues,” says Right Horizons CEO Anil Rego.
The survey revealed that almost half of the respondents were not covered by medical insurance. Those who were covered under medical insurance were because their employers deduct premium at source. Only 5% invested in medical insurance on their own, although complete tax deduction under section 80D is available for premium payment up to Rs 15,000. Another finding was that over 40% respondents did not use life insurance as an instrument of tax saving at all.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
