Save income tax by completing these 7 financial tasks before March 31

As you start planning your investments for the new financial year and set financial goals for yourself, it is equally crucial to complete various essential tasks that can assist you in saving taxes and preventing penalties, as this financial year draws to a close. By doing simple things like paying advance tax and doing tax saving investments on time you can save a lot of your hard-earned money.

 

1) Link PAN with Aadhar

The last date to link Permanent Account Number (PAN) and Aadhaar cards is March 31, 2023. If you miss the deadline your PAN will become inoperative.  In a recent advisory, the government of India clarified that it is mandatory. From April 1, 2023, the unlinked PAN shall become inoperative.

 

“First and foremost is linking the PAN with Aadhaar otherwise, the PAN will be inoperative, and the taxpayer may not be able to perform several financial transactions that require PAN. There is a penalty of Rs 10,000 in case of a person who is required to quote his/her permanent account number or Aadhaar number, quotes a false or an invalid PAN.”

 

 

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2) Payment of Advance Tax 

Every taxpayer who has a tax liability exceeding Rs 10,000 has to pay advance tax. It is paid in four installments where 15 percent is paid by June 15, 45 percent by September 25, 75 percent by December 15, and 100 percent by March 15, of the financial year. However, if you have an additional income like capital gains or you have changed your job then you might need to calculate and pay advance tax.

 

In case you have not yet paid the entire advance tax liability for 2022-2023 by March 15, then you have the chance to pay it by March 31, 2023. Post March, 1 percent interest per month has to be paid on the due amount till the payment or filing of ITR.

 

 

3) Tax saving Investments

If you have not done tax savings for FY 2022-23 then you have time till March 31st, 2023 to complete the task. Investments done after the close of FY23 will not be available for claiming deductions under the old tax regime while filing the Income Tax Return or ITR for FY 23.

 

Under section 80C of the Income Tax Act, you are enabled to claim for the tax deduction with the highest limit of Rs 1.5 lakh, provided you have chosen the old tax regime. Some of the tax-saving ways for investment in 2023 include Public Provident Fund (PPF),  Equity Linked Savings Scheme (ELSS), National Pension System (NPS), Sukanya Samriddhi Yojana (SSY) and Fixed Deposits (FDs) of 5 years or more.

 

 

4) Updated ITR Filing

It is necessary to submit the updated income-tax return for FY 2019-2020 or AY 2020-21 by 31st March 2023, as it cannot be filed by taxpayers after the deadline has passed.

 

“If any person wants to file the updated return, 31st March 2023 is the last date to file such return for FY 2019-20 with the additional tax to be paid as 50 per cent of the aggregate of tax and interest. It is pertinent to note that the updated return cannot be filed in case of refunds and in case of any tax proceeding for assessment or reassessment under the income-tax act is pending or has been completed for the relevant assessment year.”

 

 

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5) Fill out Form 12B

If you have changed jobs then do remember to fill out form 12B so that the salary from your previous employer can be included for tax calculation purposes. “In case of taxpayers who are salaried and they have changed jobs during the year, they must provide details in form 12B (details of the salary from the previous employer) to the new employer based on which the new employer will be able to deduct the exact TDS on the salary income.”

 

 

6) Capital Gain

Earlier the long-term tax on equities was tax-free but with effect from Budget 2018, the long-term capital gain on equity fund is tax-free only up to Rs 1 lakh. For the amount in excess of Rs 1 lakh the tax rate is 10 per cent without the benefit of indexation. Hence, if there is a need to redeem investments in the near future, you can consider redeeming before March 31 to avail the benefit of the tax-free limit of Rs 1 lakh for FY 23.  Short-term capital gains are taxable at 15 per cent.

 

 

If you redeem equity after one year from the date of allotment then the investment is defined as long-term. Similarly, capital gain from the redemption of equities within one year is known as short-term capital gains.

 

 

Read More: REVERSAL OF INPUT TAX CREDIT OF GST

 

7) Pradhan Mantri Vaya Vandana Yojana (PMVVY)

For senior citizens, there are various options such as Pradhan Mantri Vaya Vandana Yojana (PMVVY), for building a retirement fund.  Applications for Pradhan Mantri Vaya Vandana Yojana are being accepted till 31 March 2023. PMVVY pays out a pension at the assured rate of 7.4 per cent. The scheme is designed specifically for senior citizens who are above 60 years, and is for a fixed period of 10 years. One can invest up to Rs 15 lakh in the policy for a monthly pension of Rs 9,250. On the minimum investment of Rs 1.62 lakh, the monthly pension works out to Rs 1,000.

 

As you commence planning your investments for the upcoming fiscal year, do complete the above-mentioned tasks for smooth sailing in FY23.