Tax Hacks 104: A Financial Checklist for Year-End

Everyone seems to have a Checklist these days… a Bachelor trip checklist, things to do before retirement checklist, post-retirement checklist… you get the point!! But since the Financial Year is coming to an end on 31st March, we have made a Checklist of some pressing Financial Tasks that one needs to bear in mind before this year ends.

We have compiled a list of 7 Financial Tasks that you need to remember.

• Tax-Saving Investment for F.Y 19-20
• Filing Return for A.Y 19-20
• Linking PAN to Aadhar
• Check for Unrealised Losses (LTCG & STCG)
• Check Tax Credit in Form 26AS
• Claim Reimbursement (Salaried Employees)
• Paying your Advance Tax for FY 19-20

Tax Saving Investments

Catch-up Investments are the talk of the town again. It’s that time of the year when people scramble to do Tax Saving Investments. Amid the rush to make Tax Saving Investment, often people don’t understand the intricacies of the same.

P.S. We have a Comprehensive blog on Tax Saving Investments just for you .. 🙂

An Individual can invest in schemes under Chapter VI A and claim Tax Deductions upto INR 1.5 lakh. However, it is empirical that Tax saving Investments should be made after carefully assessing one’s Personal Finance Goals and Risk-Appetite. Hasty Investments could do more harm than good.

File your ITR for A.Y. 2019-20

Unless you fancy hearing from the Income Tax Department, it is no brainier to file your Belated ITR on time. If you have filed your faulty Belated Returns, this could be the last chance to file your Revised Return.

Note that, Individuals with their taxable income less than INR 5 lakh will be required to pay INR 1000 as a penalty. However, if your taxable income is more than INR 5 Lakh, the late filing fees could mount up to INR 10,000.

So make sure to square off your returns before 31st March 2020.

Linking PAN to Aadhar

In Budget 2020, FM Nirmala Sitharaman announced that PAN (Permanent Account Number) and Aadhaar can be used interchangeably. To do so, one needs to link his/her PAN to Aadhar.

P.S. If you are one of those many people who don’t know how to link PAN with Aadhar… We have an article that might help!

In case you failed to link PAN with Aadhar, the ITD can charge a penalty of INR 10,000 for it. Linking both would unarguably make life easy for you. Interlinked PAN and Aadhar are mandatory as they are required to file ITR, open a bank account, for buying and selling of property, applying for a loan or a credit card and for making investments, etc.

Check for Unrealised Losses

Let’s say that you have Unrealised Losses of INR 1.5 lakh in your portfolio (Unrealised loss is the loss that one will incur if he/she sells a stock). On the other hand, let’s assume that you have Realised Profits of INR 6 lakh. By selling the stock with Unrealised Losses, You can convert it into Realised losses. Furthermore, by setting off your Realised Losses against Realised Profits, your Tax Liability will be INR4.5 Lakh…this is called Tax Loss Harvesting

However, there are certain things that one needs to remember:

• Long Term Capital Losses (LTCL) can only be set off against Long Term Capital Gains (LTCG)
• Short Term Capital Losses (STCL) can be set off against Short Term Capital Gains (STCG) and Long Term Capital Gains (LTCG)
• Short Term Capital Loss (STCL) and Long Term Capital Loss (LTCL) can not be set off against any other Income

Checking Tax Credit Statement – Form 26AS

Form 26AS is an annual consolidated tax statement that can be easily accessed from the Income Tax Website. Form 26AS has the information on the Tax credit paid to the Government. Salaried Individuals can double-check the TDS deducted by their employer through Form 26AS.

One can view following details on Form 26AS:

• Details of TDS deducted on Salary, on the sale of Immovable Property, on Rental Income, etc
• Details of Advance Tax paid
• Details of High-Value Transactions
• Details of TCS on sale of a car
• Details of taxes paid by you and tax refunds

Claim Reimbursement for Salaried Individual

The Government has allowed Salaried Employees to claim Tax Exemptions on certain allowances provided by their employer. In order to claim those exemptions, Employees need to provide proof of expenses such as travel expenses, rent receipts, medical expense bills, etc.

If the employee is unable to provide the expense proofs to the employer, he/she would not be able to claim an exemption for the same. Consequently, it would be included as a part of the taxable salary in Form 16.

Advance Tax

Advance Tax is the payment of your total tax liability to the Government in Advance. It has to be paid by Individuals with Tax Liability more than INR 10,000. The due date to pay the last installment of the Advance Tax is 15th March. In the unwanted scenario of failing to pay the Advance Tax, penalty u/s 234B and u/s 234C will be imposed.

Salaried Individuals are not required to pay Advance Tax as TDS is deducted from their Salaries. Apart from salaried Individuals, Advance Tax is applicable to Individuals with non-salary income sources like:

• Income received on Capital Gains i.e, sale of shares, property, car etc.
• Interest received on Fixed Deposits, Recurring Deposits,
• Rent received on house property,
• Earnings through a lottery

Also, if you have paid excess Tax, you can claim a refund as well.

So, all in all, it is highly advisable to follow up on these Financial tasks as they help to lower your Tax liability in some way or the other. Apart from lowering your Tax Liability, they also mitigate the chance of receiving a Notice from our Beloved Taxman.

Stay tuned for blogs related to ITR, TDS, GST and some Crazy Tax Stories.