Checklist of Tasks you need to finish before end of Financial Year

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From filing your belated income tax returns to booking profits in stocks and equity mutual funds, there are certain tasks that you must complete before the financial year ending. As you sit at home, locked in due to the pandemic, complete these financial tasks before the month ends.

Top 10 Tasks you need to finish before end of Financial Year

The following are the Top 10 Tasks you need to finish before end of Financial Year:

1. Review your year for any major changes in your Life or Financial Situation

a) Did you switch jobs and get a raise this year?

More income should mean more money to spend but it should also result in more savings. Try and increase the % of salary that you save as you earn more. This is the secret to building wealth over time. Review your on-going SIPs and step them up by at least 10-15%.

b) Have your expenses increased this year – including EMIs on any new loans?

You may or may not have an emergency fund set up yet. Set one up or if you already have one you might want to top it up to ensure you have 4-6 months worth of your living expenses (including any EMIs) in your emergency fund. You can set up your emergency fund by investing in Liquid Mutual Funds or FDs. Don’t leave that money lying around in your savings bank account as you will end up spending it.

c) Has your household changed this year?

In case you got married or had a kid, several changes in your financial plan are in order. Firstly, increase your life and health insurance coverage and ensure that the new dependent(s) are provided for. Then see if you need to start another financial goal like children’s education etc. It is a good idea to make a budget otherwise your expenses will feel like they are getting out of hand. Discuss with your significant other and fix a savings target and stick to it.

2. File forms 15H or 15G to avoid TDS

This is the time to submit Form 15G (for those below 60) and Form 15H ( for senior citizens) to avoid TDS on dividends and interest income. There are certain conditions that must be satisfied first. Form 15G can be filed if total interest income does not exceed the maximum exemption limit (Rs 2.5 lakh) and tax on total income is nil. Form 15H is for senior citizens and can be submitted if the estimated tax payable for the financial year is nil. The forms have to be fi led afresh each year. Banks now allow online submission of these forms, which is a convenient option, especially for senior citizens and particularly in these times.

3. Start Tax planning for the year

The tax planning season is still far away, so few people have tax savings on their mind right now. But experts say you should start your tax planning from April itself, rather than wait and make hasty decisions in the last few weeks of the financial year. If planning to invest in ELSS funds, start an SIP in a tax-saving fund right away. By February-March, you would have already done 10-12 SIPs. Starting early also means you won’t face a liquidity crunch due to bunching of tax-saving investments at the end of the financial year. You will also have enough time to choose the best option.

4. Link PAN and Aadhaar

Another task for which the deadline is 31 March is linking your Aadhaar with your Permanent Account Number (PAN). The Central Board of Direct Taxes extended the deadline for this from 31 December 2019. If you don’t link the two, your PAN card will become inoperative, and you may not be able to perform certain financial transactions that require PAN.

5. Tax Saving Investments

You will be claiming deductions and exemptions under various sections while filing your income tax return for the financial year. For this, you would need to make the investments before March 31st. You need to check how much more you need to invest under Section 80C after accounting for your employees’ provident fund (EPF), tuition fees paid for self and child education, life insurance premium paid etc. There are certain other sections such as 80D under which you get a get deduction against the health insurance premium paid up to Rs 25,000. So, if you are planning to buy one, you need to do it before March 31st. You can also claim an extra deduction of Rs 50,000 over and above section 80C by investing in the national pension scheme (NPS). But you need to do it before March 31st to claim the deduction.

6. Open a PPF Account

For investors in the 20% tax bracket and above, the Public Provident Fund can give higher returns than the taxable Provident Fund. If you contribute more than Rs 2.5 lakh a year to the VPF but don’t have a PPF account, it makes sense to open one now. The PPF will yield 7.1% tax-free returns compared to 5.85% earned by Provident Fund in the 30% tax bracket and 6.8% in the 20% bracket. Some banks such as HDFC Bank and ICICI Bank allow you to open a PPF account

7. Keep Accounts Active

You may need to make a minimum annual contribution to keep certain existing accounts active. For instance, you need to invest a minimum of ₹500 in a Public Provident Fund (PPF) account per year to keep it active. So even if you have already exhausted your Section 80C limit (under which PPF gives you a tax deduction benefit) for the year, you should invest the minimum required amount in the instrument to keep the account active.

Similarly, if you have a Sukanaya Samriddhi Yojana account for your daughter, you need to invest a minimum of ₹250 in a year to keep the account active. In the case of the National Pension Scheme (NPS), you need to make a minimum investment of ₹1,000 if you have a tier 1 account.

8. Submit Form 12B

Form 12b is an income tax form that needs to be furnished according to Rule 26A by an individual joining a new organisation or company in the middle of the year. The main purpose of the form is to furnish details of the income earned by the individual from the previous employer. Every new employee has to submit Form 12b to their new employer. Furnishing Form 12b is not compulsory.

9. Review your spending, plan a budget for the New Year and set up SIPs

It is important to look back at the year and see how much you spent. How much of it was planned and how much was impulsive and could have been avoided? Did you meet your savings target? If not then fix a savings target (20-30% of your salary is a good number to begin with) and set up automated savings for that in way of SIPs in Mutual Funds or Recurring Deposits depending on your preference of investment type. Set up your SIPs for a day close to the salary day so that you save first before spending rather than the other way round. Plan a budget for the rest of the amount and make sure you don’t exceed that in the New Year.

10. Calculation of GST Turnover

The total turnover in your Current year up to 31st March is to be calculated for the purpose of determining the aspects like applicability of GST Registration, Eligibility of opting Composition Scheme, and Applicability of Filing of specific returns.