March 31st is round the corner and taxpayers are required to do so many things during this short period to reduce the tax outgo and avoid the wrath of taxmen. Here is list of a few things which you must do before March-end.
The month of March, which is known for tickling the nerves of taxpayers, is here again and now only a couple of weeks are left for the arrival of March 31st – the D-Day after which you won’t be able to do so many finance-related things. Or, in some cases will be able to do only after paying a penalty. It is, therefore, important for all the taxpayers to take certain timely actions to minimize the tax outgo as well as to avoid any other consequences, like facing the wrath of taxmen. Here’s a list of a few things you should do before the end of March, the last month of the Financial Year 2017-18:
1. Filing of pending tax returns
In case you are amongst the ones who are likely to miss the bus for filing income tax returns for AY2016-17 and AY2017-18, there is still a way out. You can file a belated tax return for both the years after correctly calculating your tax liability and paying the taxes due along with the applicable interest.
Further, “in case you have already filed a tax return for the above-mentioned years and intend to rectify/ amend the same for reasons such as to disclose unreported income, to claim expenses/ TDS credit, etc., you have an option to revise your tax return. It is important to note that taxpayers will not be permitted to revise or submit belated tax returns for AY2016-17 and AY2017-18 post 31 March 2018,” says Rushabh Vora, Assistant Manager-Direct Tax, N. A Shah Associates LLP.
You also need to remember that taxpayers have already been warned by the I-T Department to ‘Come Clean’ as well as file their revised or belated tax returns latest by 31st March, 2018, failing which they should be prepared to face penalty or prosecution, as the case may be.
2. Investment to avail tax deduction
In case you are amongst the ones looking to saves taxes, there are several tax-saving investment opportunities under Section 80C which allow taxpayers deductions up to Rs 1,50,000 for investments made during the financial year. Most popular and commonly-used investment categories to avail these deductions are LIC premium, tax- saving fixed deposits, tax-saving mutual funds, Public Provident Fund, National Savings Certificate, etc.
“Taxpayers may also avail a deduction of mediclaim expenses of Rs 25,000 for self, spouse and dependent children and a further deduction up to Rs 25,000 for parents provided the payment is made before the end of March. The tax deduction limit of Rs 25,000 is increased to Rs 30,000 in case for senior citizens,” says Vora.
Salaried persons need to provide supporting documents for the above investments made to their employer so that the employer does not deduct tax on such component of salary.
3. Deduct TDS if rent is in excess of Rs 50,000 per month
Individuals and HUFs paying rent of more than Rs 50,000 per month to resident are required to deduct tax @ 5% on the total rent paid during the financial year. Tax needs to be deducted in the last month of the financial year (or in last month of tenancy if property is vacated during the year).
One should ensure that the landlord has furnished his PAN to the tenant, failing which tax is required to be deducted @ 20% on the annual rent.
Therefore, taxpayers should ensure that tax is deducted before 31 March 2018 and deposited to the government before 7 April 2018.
4. Investment in Section 54EC Bonds
Taxpayers can invest capital gains up to Rs 50 lakh in certain bonds notified under Section 54EC (such as REC, NHAI) within 6 months from the date of transfer of the capital asset instead of paying capital gain tax thereon.
“These bonds carry a lock-in-period of 3 years and early withdrawal of the amount may lead to tax impact. However, the Budget 2018 has proposed to increase the lock-in-period from 3 to 5 years for investment made in these bonds on or after 01.04.2018. Accordingly, tax payers who have earned capital gains in the FY2017-18 and intend to invest the gain amount in these bonds in the next FY, may instead consider the option to invest before the end of 31 March 2018 to enjoy the lock-in-period of only 3 years,” says Aniket Sheth, Qualified Associate-Direct Tax, N. A Shah Associates LLP.
5. Linkage of Aadhaar
The government has mandated to link one’s Aadhaar with PAN, bank accounts, mobile number, insurance policies, mutual funds/ stocks, credit cards, LPG subsidy, etc on or before 31 March 2018.
Further, the return of income of taxpayers may not be processed if Aadhaar is not linked to PAN on the income-tax website by the due date.
Though the Attorney General has indicated to the Supreme Court that the Centre might consider extending the deadline for mandatory linking of Aadhaar beyond 31 March 2018, however, a formal announcement in the matter is yet to come. Therefore, making a timely move is in your own interest if you want to avoid the last-minute rush.