With only few days to go for the end of current financial year, it’s high time now that we should estimate the tax payable by us and analyse whether there is scope to reduce our tax outgo. This is so because investments which are made in the period April 1, 2016 to March 31, 2017, can only be claimed as deduction from the total income for FY 2016-17.
Here are some of the necessary tax compliances you must do before 31st March:
1. Invest in appropriate investments
To reduce the tax outgo, you can invest in various instruments such as PPF, ELSS, Insurance Policy, NPS, Tax Saving FD etc. that qualify for deduction under income Tax act. But whatever option you choose, payment for the investment must be made from April 1, 2016 to March 31, 2017 in order to claim it as a deduction in your income tax return for the current financial year 2016-17.
For instance If you have paid single LIC premium of Rs 25,000 on February 20, 2017 for the period of one year up to February 19, 2018. You can claim the whole amount in your return for FY 2016-17 as the payment is made before March 31, 2017.
Similarly, If you are planning to invest in NPS, make payment before March 31. Do remember to make the minimum contribution is Rs 6,000 which must be made to keep your account active. Minimum contribution for PPF is Rs 500.
In case of PPF, ELSS or Tax saving FD or charity u/s sec 80G, you need to make the payment before March 31 in order to claim in the return for the current financial year. If you are a salaried individual, then make sure that you have submitted the proof of all these documents to your employer such as receipts of insurance premium paid, tuition fees of children, investment in PPF or any other investment made for tax purposes. Submission of relevant documents will help your employer to calculate your correct tax liability and also avoids the excess deduction of tax from your salary. But don’t worry if you could not submit these documents to your employer in time, Section 80 deductions can be claimed directly in your next return. So if you haven’t fully utilized the limit u/s sec 80C or sec 80D you can still maximise your deductions by making payment for them before March 31.
2. Pay Advance Tax
Advance tax is to be paid by every individual if his tax liability in a financial year, exceeds Rs 10,000. So even if TDS has been deducted on your income but TDS is not sufficient to cover the entire tax liability, make sure that you pay the advance tax. The taxpayers who opt for presumptive scheme (Where business income is assumed at 8% of turnover) are also required to pay whole amount of their advance tax before March 15. Advance tax is also applicable to people doing freelancing work if their total tax liability exceeds Rs 10,000. The last due date for the payment of advance tax is to 15th March but even if you pay after March 15 but before March 31, it will be treated as advance tax payment. Interest @1% per month is required to be paid for the late payment of advance tax.
3. Claim the reimbursements
If you are salaried individual then you must be entitled to certain reimbursements as per your salary structure such as medical reimbursements, Telephone, leave travel, house rent allowance and so on, and then you must submit the proof of such expenses to your employer in order to claim the tax exemption. Otherwise these components will become Taxable for instance if you are entitled for medical reimbursement of Rs 15,000, then you must submit the medical bills worth Rs 15,000.If you submit the bills worth Rs 10,000 then remaining Rs 5000 becomes taxable. Also the proof of such reimbursements such as rent receipts, telephone bills, travel tickets to claim LTA must be submitted to employer on time as the tax benefit of these can be claimed only through employer and not at the time of filing tax returns.
4. File the return for FY 2014-15 and FY 2015-16, if not already done
Though as per the income tax rules, the last date for filing income tax return for FY 2014-15 and FY 2015-16 has already gone, but you can still file your return for FY 2014-15 and FY 2015-16. Returns for FY 2014-15, cannot be filed after March 31, 2017. Generally, no penalty is levied, only in rare cases penalty up to Rs 5000 may be levied. Filing of return helps an individual in many ways say while applying for a loan or to claim your income tax refund. So it’s high time for you to file your returns before March 31 for these financial years if you haven’t already done so.
This article has been published in Times Of India Business.