These 7 Financial Tasks Will Help You Save Income Tax!

When the current fiscal year comes to an end, it is equally important to do a number of necessary actions that can help you save money on taxes and avoid penalties. These tasks can help you plan your investments for the coming year and create financial goals for yourself.

You can save a significant amount of your hard-earned money by taking simple actions like paying your taxes in advance and making tax-saving investments on time.

The following seven financial tasks must be finished by March 31, 2023.

Link PAN with Aadhar

Permanent Account Number (PAN) and Aadhaar cards can no longer be linked after March 31, 2023. Your PAN will stop working if you miss the deadline.  In a recent advisory, the Indian government made it clear that it is required. The unlinked PAN shall stop operating on April 1, 2023.

“Most importantly, the PAN must be linked to Aadhaar; otherwise, the PAN will be inactive and the taxpayer may not be able to conduct various financial activities that demand the PAN. A person who is forced to provide their permanent account number (PAN) or Aadhaar number is subject to a fine of Rs 10,000,” according to experts.

Tax saving Investments

You have until March 31st, 2023 to finish tax savings for the fiscal year 2022–2023 if you have not already done so. On submitting the Income Tax Return, or ITR, for FY23, investments made after the end of FY23 would not be eligible for deductions under the prior tax law.

If you choose the previous tax system, you are eligible to claim a tax deduction up to a maximum of Rs. 1.5 lakh under Section 80C of the Income Tax Act. Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Pension System (NPS), Sukanya Samriddhi Yojana (SSY), and Fixed Deposits (FDs) of 5 years or longer are a few of the tax-saving investment options for 2023.

Updated ITR Filing

As it cannot be filed by taxpayers after the deadline has passed, the updated income-tax return for FY 2019-2020 or AY 2020-21 must be submitted by March 31, 2023.

“The deadline for filing an updated return for the fiscal year 2019–20 is March 31, 2023, with the additional tax to be paid as 50% of the total tax and interest. It is important to keep in mind that the updated return cannot be filed if a refund has been issued or if a taxing process for assessment or reassessment under the Income Tax Act is ongoing or has already been completed for the applicable assessment year,” according to experts.

Payment of Advance Tax

Any taxpayer who owes more than Rs 10,000 in taxes is required to pay advance tax. It is paid in four instalments: 15% by June 15 of the fiscal year, followed by 40% by September 25 and 50% by December 15 and 100% by March 15. But, you could need to compute and pay advance tax if you have additional income, such as capital gains, or if you've changed jobs.

You have until March 31, 2023, to settle any remaining advance income taxes for 2022–2023 if you haven't already done so by March 15. After March, the outstanding balance must be accompanied by 1% interest each month until it is paid or an ITR is filed.

Capital Gain

Earlier, long-term tax on equity funds were tax-free up to Rs 1 lakh, but this changed with the implementation of Budget 2018. Without the benefit of indexation, the tax rate is 10% for transactions over Rs 1 lakh. As a result, if you expect to redeem assets soon, you should think about doing so by March 31 in order to benefit from the tax-free maximum of Rs 1 lakh for FY 23. Gains from short-term investments are taxed at 15%.

The investment is considered long-term if the stock is redeemed more than a year from the date of assignment. Similar to this, short-term capital gains are those from the redemption of stocks within a year.

Fill out Form 12B

Remember to complete Form 12B if you've changed jobs so that the prior employer's income can be taken into account when calculating your taxes.

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

There are several choices available to senior citizens for setting up a retirement fund, including the Pradhan Mantri Vaya Vandana Yojana (PMVVY). To March 31, 2023, Pradhan Mantri Vaya Vandana Yojana applications are being accepted. Pension payments from PMVVY are made at the 7.4% guaranteed rate. The scheme, which has a defined duration of 10 years, is particularly intended for elders over 60. The scheme allows for an investment of up to Rs 15 lakh for a monthly income of Rs 9,250. On the minimum investment of Rs 1.62 lakh, the monthly pension works out to Rs 1,000. 

Do the above tasks to ensure a smooth FY23 as you start to prepare your investments for the upcoming fiscal year.