Seven things you must do before 31st March

  • As we are approaching towards the end of this financial year, there are certain things we should do before the year comes to an end.

1. File pending IT for financial year 2015-2016 to avoid penalty

  • Though the general due date of filing of income tax returns is 31st July of the year following the financial year, a few of us wouldn’t have been able to file the return by the due date and then must have forgotten the matter altogether. Please file your pending income tax return for the financial year 2015-2016 by 31st March 2017. In case you have taxable income and fail to file the returns for the financial year 2015-2016 by 31st March 2017, the assessing officer can levy a penalty of Rs. 5,000 for this default. However, the assessing officer cannot do so without giving you an opportunity to explain the reason for such failure.
  • If the return has not been filed by due date, you cannot revise the return later on. So be very careful while filing the return and ensure that all the particulars are correctly stated and all the income is correctly included in the return. Note that in case the tax payable in respect of any of the returns which you are planning to file now, was not paid either as advance tax or TDS, you may have to pay the interest for non payment of advance tax as well as for delay in filing of income tax return @ 1% for each of the default. So effectively if adequate tax was not paid earlier you land up paying exorbitant interest @ 2% for each month of the delay.

2. File pending IT for financial year 2014-2015 as this cannot be filed beyond 31st March 2017

  • As per the present tax laws, you can file income tax returns for last two financial years at any given point of time, so in case you have not filed your income tax return for the financial year 2014-2015, you have the last chance to file this return by 31st March 2017. So those who have not filed their income tax returns for the F. Y 2014-2015, you have the last chance to file it by 31st March 2017.

3. Payment of advance tax

  • Majority of the tax payers are salaried and their tax liability is discharged by the employer as the tax is deducted at source at the time of payment of the salaries and it is only the self -employed tax payers who normally have to pay advance tax. However even in case of salaried employees if you have any other taxable income for the year like capital gains, interest on fixed deposits etc. you have to pay advance tax on such income in case such income is not reported to your employer.
  • In cases of interest income, though the tax is deducted at source at the rate of 10% by the payers, you may still have to pay advance tax in case your applicable slab rate is more than 10%. In cases of sale purchase of any capital assets like shares etc. on which you are liable to tax, you are supposed to discharge this liability by way of payment of advance tax. Though advance tax can be paid in four installments and in case you have missed three earlier dates, pay the balance advance tax by 15th March which is the date for last installment. Even any advance paid by 31st March is also treated as advance tax.
  • Please note that you need not pay any advance tax in case you advance tax liability does not exceed Rs. 10,000 for the year. Moreover, in case you are a senior citizen and are not engaged in any business or profession, you need not pay any advance tax. In the above two cases the tax can be paid while filing your income tax return. Please note that you are required to file the income tax return by the due date and pay the tax then. In case of delay, you will have to pay interest on amount of the tax payable.
  • In case you are liable to pay advance tax and fail to pay it fully, you may have to pay double interest, firsts for non payment of advance tax from the 1st day of April and secondly for filing of income tax return delayed beyond the due dates from the due date of filing of your return. You have to pay interest for non-payment of advance tax from 1st April of the next year till the taxes are actually paid.

4. Filing details of salaries received from earlier employer

  • If you have worked with more than one employer during the previous year and you have not provided the details of salaries received from the previous employers to current employer, please provide the same to your current employer immediately so that the current employer can take the same into account while making tax calculations. The same details have to be submitted to your employer in form no. 12B. In case you do not do this now, you may get the shock when you are required to pay huge tax at the time of filing of your return of income. This happens because all the employers would have given you the benefits of initial exemption as well as deduction under Section 80 C thus resulting into deduction of lower tax as compared to your actual liability.

5. Minimum contribution to PPF account and NPS account

  • This is for the persons who have opened a PPF account either in their own name or in the name of their children as well. It may so happen that you have already exhausted the deduction available under Section 80 C through other means and need not contribute any amount to the PPF account, you still need to contribute the minimum amount of Rs. 500 every year in each of the PPF account to avoid the account becoming dormant. The dormant account can be made active account by payment of Rs. 100 as penalty and contribution of Rs. 500/- for each year of default.
  • In case you have opened an ordinary NPS account, there needs to be a minimum deposit of Rs. 5,724 after deducting the charges every year in the account. So in case there are not adequate credits in the your NPS account during the year, please deposit the minimum amount so as to avoid the account categorized as frozen. The frozen account however can be made active by paying a penalty of Rs. 100 and one contribution of Rs. 500. Note that the amount to be deposited is only one time and not in respect of each of the years of default.

6. Verify the amount of deduction available from your bank records

  • For various amounts eligible for deduction under Section 80C we avail the facility of ECS in our bank account like life insurance premium, SIP for equity linked saving schemes etc. It may so happen that the ECS might not have hit the bank account due to any reason or even in case you have issued a cheque for the life insurance premium, the cheque might not have been yet presented to the bank. So please verify and cross check that for all the eligible amount of deduction, the amount has in fact been debited in your bank account failing which you will not be able to claim the deduction available.

7. Make investments in qualifying products for claiming tax benefits under Section 80 C and 80 CCD(1B) in appropriate products only

  • In case you have not made investments for claiming tax benefits do not rush to buy any life insurance unless you really need risk cover. And even if you have to buy insurance buy online term plan and not traditional products or ULIP.
  • Likewise do not put your entire investments ELSS as this is basically an equity investment product and it is never advisable to make investment in equity in lump sum so in order to avoid volatility you can invest either in national savings certificates or tax saving fixed deposits for five year to ensure at least a fixed investment.

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Financial Management