Come January and one can see tax payers en masse running for the so-called cover under Section 80(C). TSI's Deepak
Ranjan Patra questions this just-in-time planning and analyses the viability of various ads promoting the Sec.80(C) concept
With the beginning of January 2010, Rajneesh Rana has all of a sudden started receiving more phone calls per day than what he used to receive during the last nine months of 2009. In fact, these days he receives at least one phone call and 3-4 SMSs every two hours, starting from 8 am till 8 pm. Well, it’s not that he has hit a jackpot or found a treasure and people are pouring in from all directions to congratulate him; it’s just that he is a salaried person and almost everyone in the financial services world knows this, at least it seems so from these phone calls and messages. After all, every single life insurer and Asset Management Company (AMC) with a product tagged ‘tax saver’ in its portfolio is chasing him to bag a share of his Rs 1,00,000 investment allowed under Section 80(C) of the Income Tax Act.
Rajneesh is not just one of the cases. In fact, a majority of the ‘salaried’ class displays the classic herd mentality in running around to ‘take advantage’ of a scheme, some scheme, any scheme, for ‘saving taxes’. The question remains, why now? Why are the marketing brains sitting at the insurers’ or fund house offices opening all their guns only in the last quarter after going easy for three quarters?
Despite our review, there is strong logic behind the move by insurance/fund houses. The answer certainly rests on investors’ attitude to defer their investments till the very end and then rush to park their money, rather dump it, in any instrument that allows them a deduction of Rs 100,000 during the computation of tax liability for a particular financial year. Keeping this trend in mind, marketers during these months try to roadblock investors’ minds by bombarding their names with all possible means starting from increased advertising to paying higher commission to distributors.
However, as people in financial services industry believe, though ads and other similar campaigns help in increasing awareness of a brand, it’s actually the financial advisors and distributors who finally make the investor invest in a particular instrument. This makes the marketers depend heavily on these distributors during the last quarter of the year. “Some even end up paying higher commissions to distributors at this point,” reveals an independent financial advisor working with a UK-Indian insurance JV.
Ranjan Patra questions this just-in-time planning and analyses the viability of various ads promoting the Sec.80(C) concept
With the beginning of January 2010, Rajneesh Rana has all of a sudden started receiving more phone calls per day than what he used to receive during the last nine months of 2009. In fact, these days he receives at least one phone call and 3-4 SMSs every two hours, starting from 8 am till 8 pm. Well, it’s not that he has hit a jackpot or found a treasure and people are pouring in from all directions to congratulate him; it’s just that he is a salaried person and almost everyone in the financial services world knows this, at least it seems so from these phone calls and messages. After all, every single life insurer and Asset Management Company (AMC) with a product tagged ‘tax saver’ in its portfolio is chasing him to bag a share of his Rs 1,00,000 investment allowed under Section 80(C) of the Income Tax Act.
Rajneesh is not just one of the cases. In fact, a majority of the ‘salaried’ class displays the classic herd mentality in running around to ‘take advantage’ of a scheme, some scheme, any scheme, for ‘saving taxes’. The question remains, why now? Why are the marketing brains sitting at the insurers’ or fund house offices opening all their guns only in the last quarter after going easy for three quarters?
Despite our review, there is strong logic behind the move by insurance/fund houses. The answer certainly rests on investors’ attitude to defer their investments till the very end and then rush to park their money, rather dump it, in any instrument that allows them a deduction of Rs 100,000 during the computation of tax liability for a particular financial year. Keeping this trend in mind, marketers during these months try to roadblock investors’ minds by bombarding their names with all possible means starting from increased advertising to paying higher commission to distributors.
However, as people in financial services industry believe, though ads and other similar campaigns help in increasing awareness of a brand, it’s actually the financial advisors and distributors who finally make the investor invest in a particular instrument. This makes the marketers depend heavily on these distributors during the last quarter of the year. “Some even end up paying higher commissions to distributors at this point,” reveals an independent financial advisor working with a UK-Indian insurance JV.
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