The Financial year 2015-16 is about to end and the new Financial Year is about the start. In India, we follow the Financial Year for all tax purposes and Income Tax is levied on the total income earned during a financial year.
The deductions, exemptions and rebates are also provided separately for each financial year. As a general rule, if you are unable to claim any deduction/ exemption/ rebate during a financial year – then it cannot be carried forward to the next financial year (except otherwise stated).
Therefore to claim all these exemptions/ deductions/ rebates which will in-turn reduce your tax liability for the year, it is extremely important for everyone to ensure that they have taken all necessary steps during the financial year and planned their taxes accordingly.
Irrespective of whether you take these steps in the start of the year or the middle of the year or at the end of the year – you would be allowed tax benefit for the same. Therefore, in case there is anything which you missed out on, you can still do it and reduce your tax liability.
7 Things to do before 31st March 2016
- File pending income tax returns
If you missed the due date for filing income tax returns for the previous years, you can still file a belated return of income tax. The last date for filing belated return of income tax for Financial Year 2013-14 is 31st March 2016.
If no Tax was payable – then no penalty would be levied for filing a belated return of income tax. However, no tax payable does not mean that you are not required to file income tax returns. You would still be required to file income tax returns if your total income for the financial year was more than the minimum amount which is exempted from the levy of tax.
- Recommended Read: Procedure for filing Income Tax Returns after due date
- Submit Investment Proofs to your Employer (For Salaried Employees)
If you are a salaried employee, you are required to submit investment proofs to your employer for the Financial Year 2015-16. Delay in submission of investment proofs to the employer may lead to excess TDS being deducted on your Income.
Although you can claim refund of the excess TDS deducted at the time of filing of income tax returns, it is still better to timely submit the investment proofs to your employer.
- Pay Advance Tax
All taxpayers are required to pay tax at regular intervals during the same year in which the income is earned. For salaried employees, the employer deducts the TDS and therefore they are not required to deposit Advance Tax.
However, all other category of taxpayers are required to self assess their tax liability on their estimated income and deposit the same with the govt. Any delay in deposit of Advance Tax will attract interest for late payment of income tax.
- Section 80C Deductions of Rs. 1,50,000
Section 80C allows for a Deduction of Rs. 1,50,000 and these are one of the most popular and most effective form of deductions. These deductions are available to all category of taxpayers and are allowed for investments in certain specified instruments.
If you have not invested in the specified instruments for which deduction is allowed under Section 80C, you should do it now. Here is an exclusive coverage of the most popular and most commonly invested instruments which are allowed as a deduction under Section 80C, 80CCC, 80CCD.
- Details of Tax Saving Fixed Deposit
- National Savings Certificate (NSC): Interest Rate & Tax Benefits
- PPF Account and its Benefits
- Repayment of Principal part of Home Loan
- Tax Saving Mutual Funds
- Additional Deduction of Rs. 50,000 for Investment in NPS Account
The Finance Minister in the Budget 2015 announced additional deduction of Rs. 50,000 for Investment in NPS Account. This Deduction is allowed under Section 80CCD and is over and above the deduction of Rs. 1,50,000 mentioned above.
Very few taxpayers are aware of this deduction as this is a newly introduced additional deduction. However, this is a useful deduction as it not only provides for additional deduction but also helps in Retirement Planning
- Recommended Read: Section 80CCD Deduction for Investment in NPS Account
- Save Tax under Section 80D, Section 80DD & Section 80DDB
The Income Tax Act also allows for deductions to save tax if the expenditure has been made by the taxpayer for ensuring his own health or the health of his relatives. Different amount of Deductions are allowed under each of these sections which will help in saving the Income Tax depending on the kind of insurance policy opted for.
A Deduction of Rs. 5000 under Section 80D is also allowed for preventive health check-up done in a hospital. This deduction for preventive health check-up is allowed if the payment for the preventive health check-up of individual himself or his family members which includes parents and dependent children.
- Section 80D: Medical Insurance Premium of Self & Spouse
- Section 80DD: Medical Treatment of Handicapped Dependents
- Section 80DDB: Treatment of Specified Disease
- Make minimum contributions
Some investment accounts like PPF Account, NPS Account require you to make minimum contribution every year. You can make this minimum contribution at any time during the year.
If you have not deposited the minimum contribution in these accounts in Financial year 2015-16 – it is time for you to do the same.