It is wise to complete all tax-related tasks on time. It usually takes 2-3 days to complete all tasks nicely. This is why leaving it for the last minute can result in mistakes. Being systematic and organized is the key to solve tax-related issues.
The end of the financial year is barely a fortnight away and the March 31st deadline still looming over some important tax-related matters, it will be prudent to give a 2 to 3-day buffer to complete all your tax-related tasks and clear all your tax-related queries. Many times taxpayers leave these tasks to the last minute, this can cause a lot of confusion for the assessing officer as well as the taxpayer. In many cases, the taxpayer makes an honest mistake due to the hurry and forgets to include certain aspects of his/her income in the tax declaration. If a person works in a systematic, organized manner filing for taxes is not a very complicated or tedious process. Listed below are some important tax-related tasks that an individual should attend to before the end of the financial year.
For people who do not file their income tax returns (ITRs) on time, March 31st could very well be the last date to file them to do so. The Income Tax Department only allows a person to file Income Tax Returns for up to two years. So, while filing your Income Tax Returns for the financial year 2020-21, you can only file for Income Tax Returns of the financial years 2018-19 and 2019-20 along with it.
If a person is filing ITR for any previous years, he/she should make sure the interest on unpaid taxes is added, if any. Under section 234A of the Income Tax Act, a delay in ITR filing can cause an interest to be levied. The taxpayer will be liable to pay a 1% simple interest per month or part of a month for delay in ITR filing. To avoid the penal interest on unpaid tax, the taxpayer should pay all taxes by March 31st. If the taxpayer pays advance tax in installments and defaults in payment of the installments, a penal interest under section 234C is applicable. A business that pay tax under the presumptive income scheme (Section 44AD) should also pay 100% of their advance taxes on or before March 15th.
People who have changed jobs in 2016-17 will need to provide the financial details of their previous employment, such as, details of income, Provident Fund (PF) contributions, Leave Travel Allowance (LTA), Section 80C etc. These details are usually collected by the new employer at the time of joining or by March 31st latest. Form 12B is required to be furnished by a person joining a new job as per Rule 26A, this will allow the new employer to access information such as, salary earned from previous employer and tax deduction at source (TDS). Form 12B allows the employee to make declarations about tax deductions he/she would like to claim.
There are many deductions for investments and cash outflows that can reduce the taxpayer’s tax liability. Section 80C allows for a maximum deduction of Rs.1.5 lakhs on the annual gross total income of the taxpayer for eligible investments and expenses. The eligible investments under Section 80C include Equity Linked Savings Schemes (ELSS), Public Provident Fund (PPF), National Savings Certificate (NSC) etc. The eligible expenses under Section 80C are tuition fees, principle repayment of home loan, etc. An additional deduction of Rs.50,000 is allowed under Section 80CCD(1b) for investments in the National Pension Scheme. Various other deductions are also applicable under Sections 80D for premium paid towards health insurance for self and family for people over 60 years. Section 80E provides deductions relating to education loans. Section 80G provides deductions for donations made. It would be prudent to make investments in some tax saving schemes before March 31st.
If a person invests in various tax saving schemes, he/she will need to inform their employer. Most employers have a deadline for such submissions, usually between January to February. If a person misses the deadline stipulated by the employer, he/she may reflect this investment in his/her ITR.