As we are approaching towards the end of the financial year, there are certain things we should do before the year comes to an end.
File pending I-T return to avoid penalty
Though the general due date for filing of income tax returns is July 31 of the year following the financial year, but if you have not filed it by the due date, you should file your tax return for the financial year 2015-2016 by March 31, 2017. In case you have taxable income and fail to file the returns for the financial year 2015-2016 by March 31, 2017, the assessing officer can levy a penalty of Rs 5,000 after giving you an opportunity to explain the reason for such failure.
Pending income tax return for FY 15
As per the present tax laws, you can file income tax returns for two financial years at any given point of time, so in case you have not filed your income tax return for the financial year 2014-2015, you have the last chance to file this return by March 31, 2017. So those of you who have not filed their income tax returns for the FY 2014-2015 can only file it by March 31, 2017.
Pay advance tax by March 15
Majority of the taxpayers are salaried and their tax liability is discharged by the employer as the tax is deducted at source at the time of payment of the salaries and it is only the self-employed taxpayers who normally have to pay advance tax. However, even in case of salaried employees if you have any other taxable income for the year like capital gains, interest on fixed deposits etc. you have to pay advance tax on such income in case such income is not reported to your employer and your net tax liability after deducting TDS exceeds Rs 10,000. In cases of interest income, though the tax is deducted at source at the rate of 10% by the taxpayers, you may still have to pay advance tax in case your applicable slab rate is more than 10%. In cases of sale purchase of any capital assets like shares etc. on which you are liable to tax, you are supposed to discharge this liability by way of payment of advance tax. Though advance tax can be paid in four instalments and in case you have missed three earlier dates please pay the balance advance tax by March 15, 2017 which is the date for last instalment. Even any advance paid by March 31 is also treated as advance tax. In case you are a senior citizen and are not engaged in any business or profession, you need not pay any advance tax but have to discharge the tax liability by July 31, 2017. In case you are liable to pay advance tax and fail to pay it fully, you may have to pay double interest, first for non-payment of advance tax and second for the delay in filing of tax return.
Details of salary from previous job
If you have worked with more than one employer during the previous year and you have not yet provided the details of salaries received from the previous employers, please provide the same to your current employer immediately so that proper tax is deducted during the year. In case you do not do this now, you may get the shock when you are required to pay huge tax at the time of filing of your return of income as all the employers would have given you the benefits of initial exemption as well as for Section 80C thus resulting into deduction of lower tax as compared to your actual liability.
Contribution to PPF, NPS account
In PPF account you have to make minimum one contribution of Rs 500 every year failing which your account becomes dormant. The dormant account can be made active by payment of Rs 100 as penalty and contribution of Rs 500 for each year of default. Likewise for NPS, there needs to be a minimum deposit of Rs 6,000 every year failing which the account gets frozen. The frozen account, however, can be made active by paying a penalty of Rs 100 and one contribution of Rs 500. Please note that the amount to be deposited is only one time and not in respect of each of the years of default for each of the year of default.
Verify deductions available
For amounts eligible under Section 80C we avail the facility of ECS like life insurance premium, SIP for equity linked insurance schemes etc. It may so happen that the ECS might not have hit the bank account due to any reason or even in case you have issued a cheque for the life insurance premium, the cheque might not have been yet presented to the bank. So verify that for all the eligible deductions, the amount has in fact been debited in your bank account failing which you will not be able to claim the deduction available.
In case you have not made investments for claiming tax benefits, do not rush to buy any life insurance or ULIP products unless you really need risk cover. Likewise, do not put your entire investments in ELSS as this is basically an equity investment product and it is never advisable to make investment in equity in lump sum. So in order to avoid volatility you can invest either in National Savings Certificates or tax-saving FD for five years to ensure at least a fixed investment. If you have not made additional investment for Section 80CCD (1B) for NPS, please do it by now to claim additional deduction of Rs 50,000.
The writer is CA, CS and CFP. At present, he is working as Company Secretary of Bombay Oxygen Corporation Limited. The views expressed in this article are his own
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