Tax compliance is one of the most important things that a person should look after. As per the Income Tax Authorities, every tax payer whose taxable income exceeds Rs. 2, 50, 000 in a financial year should pay taxes on the basis of the respective tax slab. However, there are certain areas where the department has offered a leverage to the tax payers. So, let’s take a look into come of the tax compliances which one must do before March 31.
#1 – Keep a track of your income
Irrespective of whether you are in a business or profession, you should always keep a track of your income. Though this does not mean that you should be accounting every single rupee that you own, but you should be have a rough idea of the income that you have generated in the past 12 months (April to March). Having a rough estimate of your income will allow you to diversify your income and reduce the tax liability.
#2 – Invest Wisely
Before March 31 arrives, place some of your income under investments. The IT-Department offers a sum of INR 1, 50, 000 as deduction under Section 80C if you invest in areas such as LIC, PPF, EPF, NSC, SCSS, etc. These investments should be made during the financial year only. Investments made after 31 march are allowed as deduction in next year. For example if you have paid Rs.10,000 as LIC premium on 10 march,2017 for 1 year then Rs.10,000 will be allowed as deduction in FY 2016-17.
In case you are salaried person you also need to submit all the relevant documents to your employer such as tuition fee receipts, LIC premium receipts, investment in PPF etc.
However, the sum total of investment made under Section 80C would be offered as a deduction or INR 1, 50, 000, whichever is lower. Also in case of donation or charity under section 80G, there should be payment before 31 march.
#3 – Look after your health
Keeping a track of your health can also help you claim some deduction under Section 80D, 80DD and 80DDB. Paying health insurance premium under Section 80D can help you save INR 25, 000 from your tax liability. If the health insurance premium is in respect of a Senior Citizen, then the amount of deduction will become INR 30, 000. Deduction of INR 5000 is available for Preventive health check-up under section 80D, this is included in the limit of Rs.25,000.
Under Section 80DDB, tax payers can claim INR 40, 000 as deduction for treatment of critical ailment. If senior citizens is claiming such deduction, then his applicable deduction would be INR 60, 000. Very Senior Citizens can make a claim of INR 80, 000.
#4 – File your advance tax
Tax payers are often required to pay advance tax if his tax liability is more than Rs.10,000. In case TDS is being deducted on your income but if it is not sufficient, then also you need to pay advance tax. The person opting for presumptive income also need to pay whole amount of their advance tax before March. The last date of payment of advance tax is 15 March but also if you pay the advance tax before 31 March, it is treated as advance tax. There is 1% interest per month if there is delay in payment of interest.
One should not be waiting for suggestions or guidance for paying tax. Payment of taxes should be taken as a privilege and should be completed within the due period.
#5 – Claim the reimbursement
In case you are salaried person then you are entitled to some reimbursement as per your salary structure such as telephone bills, leave travel, medical reimbursement and so on, then you need to submit the proofs to your employer in order to claim tax exemption. Otherwise these all become taxable in hand of employee. If you entitled for medical reimbursement of Rs.12,000, then you must have to submit medical bills to your employer to claim tax exemption. These could be only claimed through employer not while submitting return.
#5 – Consult your tax adviser
Your CA is one of the best people to guide you on tax saving. Consult your CA and let him help you claim some other deductions as well. Additionally, he can also fix up errors in computation, if any.
#6 – File the return for last 2 financial years if not filed earlier
As per income tax rules the last date of filing income tax return is 31 July of assessment year for an individual. Also, as per Section 139(4), any person who has not furnished a return within the time allowed to him, may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
For example: For FY 2014-15 & FY 2015-16, ITR can be filed up to 31 March,2017 but for FY 2015-16 the return could be filed up to 31 March, 2018.
So, in case previous year return is not filed, file the return before 31 March. Filling return helps to raise loans and claim refund.
Make sure your Tax Compliance is ready to go right before March 31. Have questions? Put them in the comment section and we will help you to clear your doubts!