How to complete tax-related issues before March 31, 2017
Credit: Economic Times
With hardly a fortnight left for the end of the financial year 2016-17, the March 31 deadline remains sacrosanct for several tax-related matters. Leaving things to the last minute has its own share of risks. So, keep a 2-4 days buffer to finish all tax-related tasks.
Picture this: A taxpayer invests through a cheque on March 30 (or even on March 29), but the payment doesn’t go through for some reason, say, wrong date or signature mismatch, and by the time the taxpayer rectifies the mistake, it’s the new financial year (FY), i.e., 2017-18. Something may go wrong when it comes to online payments too if things are left to the last minute.
Here are few tax-related matters to attend to now so that they can be wrapped up by March 31.
Filing tax returns
If you are one of those taxpayers who has not filed income tax returns (ITRs) in time, March 31 could be the last date for some of you, depending on the FY that you wish to file for. Archit Gupta, Founder & CEO, ClearTax.com, says, “In one financial year, you can file your IT returns for the previous two financial years. So, in FY 2016-17, you can file returns for FY 2015-16 and FY 16-17. Returns for FY 2014-15 cannot be filed after March 31, 2017.”
If tax remains to be paid
If you are filing ITR for any previous year, make sure you are adding interest on the unpaid tax, if any. Under Section 234A of the I-T Act, interest is levied for delay in ITR filing. The taxpayer is liable to pay simple interest at 1 per cent per month or part of a month for delay in filing ITR. Gupta informs, “To avoid penal interest on tax dues, one must pay all taxes by March 31. However, if advance tax applies to you and you didn’t deposit advance tax as per instalments, interest under section 234C may still apply to you. Businesses covered under presumptive income scheme must also make sure the deposit all their tax dues by March 31.”
More than one employer
If an employee switched jobs in 2016-17, he needs to inform the present employer about the details of income, provident fund (PF) contributions, Section 80C, leave travel allowance (LTA), etc., already made with the previous employers. In fact, this should be done at the time one joins the new job, and by March 31 in any case. Information about salary earned from the previous employer and tax deduction at source (TDS) can be communicated to the current employer by using Form 12B. Besides, one can make disclosures about tax deductions one wants to claim in Form 12BB to their current employer, says Gupta.
Complete your tax savings
The tax saving investments done in FY 2016-17 will help you lower your tax liability for the year. Choosing the right tax saver may not be an easy task for all, hence do not wait till March 31. Click here to find out the right tax saver that suits you.
Several tax savers such as PPF, National Pension Scheme (NPS), etc., require a minimum amount to be deposited each year in order to keep them active. Else, one would have to pay the unpaid amount along with penalty to make them active again. Make sure you deposit the requisite minimum amount in them by March 31. Ideally, putting in the minimum amount doesn’t help much in meeting long term goals. It’s better to link one’s investment to a goal and invest the estimated amount accordingly and not just pay the minimum amount as it doesn’t help in the long run in meeting the goal.
While PPF require a minimum deposit of Rs 500 a year to keep it active, the minimum yearly contribution for NPS (Tier I) is Rs 1,000, excluding charges and taxes, but for Tier II, there is no minimum contribution requirement for the financial year. Tier I also requires at least one minimum number of contribution in a year. Keep a tab on these minimum limits as it can be changed at any point of time by the government.
Informing your employer
For salaried individual, merely making a tax saving investment may not be enough. One needs to submit documentary evidence of the same to the employer. Most employers have a cut-off date for such submissions, which could be anytime between January and February 2017. For those who have made tax saving investment after the employer’s cut-off date, the same can be shown while filing ITR. Here is a recap of things to inform your employer.
Investments made on ad-hoc basis have high probability of not giving the desired results. From the start of the next FY, prepare a plan in advance, taking care of your tax savings requirement and the goals to achieve. Unless you begin now, March 31, 2018 will not be any different from what it is this year.