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Your Checklist before the Financial Year Ends

Summer is coming, and so is the New Financial Year.

But hey! F.Y 2021-22 left us a note saying, there are certain tasks that you might not have ticked off your checklist. And till you do that, your welcome party of the New Financial Year might fall a bit short.

So, what can these tasks be? Let’s take a look

Make Tax Saving Investments

Section 80C of the Income Tax Acts offers you an array of Investment options like ELSS, PPF, NSC, and more. You can claim deductions of up to INR 1.5 lakh in a year and get returns ranging from 6%-14%.

Exhausted your INR 1.5 Lakh limit under 80C? You can claim an additional deduction of up to INR 50,000 u/s 80CCD(1B) by investing in the  New Pension Scheme Account.

That’s not all! You can also claim deductions for the following payments & contributions:

  • Payment of Medical Insurance premiums u/s 80D
  • Interest paid on education loan u/s 80E
  • Interest paid on Electric Vehicle loans u/s 80EEB
  • Donation to Charitable organizations u/s 80G and so on

Check out Chapter VIA of the Income Tax Act to get a comprehensive list of all the deductions that you can claim.

However, if you want to claim these deductions for F.Y 2021-22, buckle up and make those investments, payments, and contributions by 31st March 2022.

Oh! But, remember these are only applicable under the Old Tax Regime.

Make contributions to keep your Investments/Saving accounts active

If you have invested in certain schemes which require a minimum annual contribution. For example, if you have a PPF account you need to make a minimum yearly contribution of INR 500 to keep it active. Similarly, if you have a Sukanaya Samriddhi Yojana account for your daughter, you need to make a minimum annual investment of INR 250.

So if you are yet to make these contributions, here’s your reminder to do that before 31st March 2022

Link Your PAN to Aadhaar

The Government has extended the due date…yet again…to link your PAN to Aadhaar to 31st March 2022.  As of 24th January 2022, more than 43.34 crore Permanent Account Numbers (PANs) have been linked with Aadhaar.

Not linking your PAN with Aadhaar will come with consequences like
– Your PAN becoming inoperative
– A penalty of upto INR 1000

So if you have still not linked your PAN to Aadhaar, consider this as your final call to do it.

Opt for Tax Harvesting

To all the investors out there, now is the time to optimize your Income Tax Liability.

Tax Loss Harvesting

In FY 2021-22, if you have booked profits in asset classes such as equity share and mutual funds you are liable to pay tax at

  • 15% for STCG (where STT is paid)
  • 10% for LTCG (above INR 1 lakh)

Now, under tax-loss harvesting, you can sell your loss-making securities to realize losses and set them off against your realized gains. If you wish to hold the same stocks in your portfolio, you may choose to buy them back.

This method of realizing your unrealized losses and setting them off against realized gains to optimize your tax liability is called Tax Loss Harvesting.

Tax Gain Harvesting

We all know that Long Term Capital Gains are taxed at 10% but there is an exemption limit of INR 1Lakh. Under Tax Gain Harvesting, you can sell your investments to realize LTCG up to INR 1 Lakh – which is tax-exempt. You may also choose to reinvest the entire amount back to maintain your portfolio.

Tax gain harvesting can help you save up to INR 10,000 in taxes every year.

Last Chance to file your ITR for F.Y 2020-21 (A.Y 2021-22)

If you are yet to file your ITR for F.Y 2020-21, make sure to file a Belated Return u/s 139(4) before 31st March 2022.  However, filing a belated return comes with its share of repercussions:

  • Interest Penalty u/s 234A in case you have tax liability
  • Late Filing Fees u/s 234F
  • inability to carry forward losses (except house property loss under the old tax regime)

Also, if you have filed your ITR but want to make amends to it…you can do that and file a revised return before 31st March 2022.

It’s still not too late to pay Advance Tax

15th March 2022 was the last date to pay the 4th and last installment of Advance Tax for F.Y 2021-22. If you miss out on paying Advance Tax or pay less than the required amount, then you will be liable to pay a penal interest u/s 234B and 234C at the rate of 1% per month or part of the month.

So although it is past the due date, you can still pay your Advance Tax at the earliest to save up as much as possible on the penal interest.

Determine your Residential Status for F.Y 2021-22

The pandemic turned the world upside down forcing people to relocate across the globe.

So, in the last year or so you might have shifted back to India, traveled abroad, or got stuck somewhere given the travel restrictions. Now, all of these may affect your residential status

Taxability in India depends on the residential status of an individual. According to Income Tax Act, there are three residential statuses

1. Ordinary Resident of India

2. Resident but Not Ordinary Resident of India (RNOR)

3. Non-Resident of India (NRI)

And each of these categories will be taxed differently. For example, ordinary residents in India will be taxed in India on their income earned globally. On the other hand, NRIs will be taxed on income earned, accrued, or received in India.

Submit Proofs of Investments and Expenses to your employer

As salaried individuals, if you have made tax-saving investments and payments throughout the Financial year, you need to submit the proofs of those investments to your employer. This also includes submitting proofs for claiming tax-exempt allowances like HRA, LTA and so on.

To submit the relevant documents to your employer and watch that TDS get optimized.

Go through your AIS

To put it very simply, AIS is the summary of your Financial year. It contains details of TDS deposited on your behalf, Advance Tax paid, high-value transactions, securities transactions and much more.
So, go through your AIS in to get an understanding of your transactions, taxes you have paid, any pending tax dues that you may have, and so on. And guess what, if you notice any discrepancy or mismatch in your AIS  you can submit online feedback and get it corrected too.

So how many of these tasks have you ticked off your checklist? Share your thoughts with us.

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