As the new financial year approaches, you may have already started planning your investments to achieve your financial goals. But before we dive into the new financial year 2023-24, it is necessary to complete certain tasks before 31st March 2023 to ensure maximum savings and a good start to the new fiscal year. Taking care of these important things will enable you to save on taxes and prevent yourself from paying certain penalties. So, let’s take a look at the top 8 things you need to do before 31st March 2023.
Link your PAN with Aadhar
The first thing that you need to do is link your PAN with your Aadhar. The last day to do so is 31st March 2023. However, you must do this after paying a penalty of ₹1000. If you do not link your PAN with Aadhar, your PAN will become inoperative from 1st April 2023. Now, what happens when it becomes inoperative?
You will not be able to do certain things if your PAN becomes inoperative. For example, you cannot file your income tax returns. If you’re filing an ITR, and you are eligible to claim a refund, you will not be able to get that refund either since you cannot file your ITR. Additionally, the TDS will be charged to you at the highest rate, which is 20%. Apart from this, you will not be able to do a lot of transactions, such as investing in mutual funds, if your investment amount is greater than ₹50,000. So, in order to avoid this, make sure you link your PAN with your Aadhar before 31st March 2023 after paying a penalty of ₹1000. In case you miss the date, the penalty will increase, and your PAN will become inoperative.
Payment of advance tax
If your tax liability is more than ₹10,000 in a financial year, then you are supposed to pay advance tax each quarter. And for that, the last date is 31st March 2023. Although, the date for the last instalment would be 15th March 2023. But in case you have not paid your advance tax even after 15th March, then 31st March will be the last date. If you exceed 31st March 2023 as well, a 1% penalty will be charged on the tax amount due until the day you pay your taxes or until you file your income tax returns. So, make sure you clear all your dues of advance tax payments before 31st March 2023.
Updated ITR filing
Any individual who is eligible to file an updated ITR for the financial year 2019-20, that is, the assessment year 2021, needs to file the updated ITR before 31st March 2023. You cannot file your updated ITR once the deadline has passed.
Tax-saving investments
As we are reaching the end of the financial year, it is important to understand whether any tax-saving investment can help you save on taxes. Although if you are a salaried individual, your TDS may have already been deducted. But in case you missed your tax-saving investments, you still have a few days left to make these investments.
So, if you make any of your tax-saving investments before 31st March 2023, then when you file your income tax returns, you can claim it and claim a refund if there are any. These tax-saving investments include section 80C investments which are ELSS, PPF, 5-year fixed deposit, life insurance policies, etc. Hence, any investment which is eligible for Section 80C deduction can be done before 31st March. Also, you can make an NPS investment before 31st March to claim an additional ₹50,000 deduction for yourself. And in case you want to claim a little extra amount, you can also invest in a health insurance policy. However, the health insurance policy premium needs to be paid before 31st March so that you can claim it in this financial year. So, to save additional taxes, make sure your tax-saving investments are done before 31st March 2023.
Form 12B
If you have changed jobs during the financial year, then it is important to submit form 12B to your current employer. This form states your previous employment details. Through form 12B, your new employer will know what income you received from your previous employer, and your TDS deduction will be done accordingly.
In case you have not filled the 12B form, your TDS deduction will be lesser, and at the time of filing income tax returns, you will have to bear an additional penalty of paying taxes which can also attract advance tax penalties as well as interest. So, make sure you fill out form 12B and give it to your present employer to avoid any extra or additional taxes later on.
Tax gain harvesting
The next essential thing that you can do is tax gain harvesting. When you invest in equity mutual funds or equity investments, a gain of up to ₹1,00,000 is exempt from tax. So, towards the end of the financial year, if you book your profits or your gains up to ₹1,00,000, you will be avoiding tax on this amount. The strategy is known as tax gain harvesting, where you will sell your investments, book a gain of ₹1,00,000, and then reinvest your money again into the market, but again you will be booking a gain of ₹1,00,000. So, you can opt for tax gain harvesting to save your capital gain tax. But make sure that you do these transactions before 31st March 2023.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a scheme specifically for senior citizens and is for a period of 10 years. If you want to invest in such a scheme, the last date is 31st March 2023. After that, applications will not be allowed. This particular scheme is specifically for senior citizens above the age of 60 years, and it offers a 7.4% assured rate of return. If you are a senior citizen and want to benefit from such a scheme, invest here before 31st March 2023.
Tax-saving insurance
In the recent budget, it was announced that maturity proceeds from high-ticket life insurance policies would be taxable. However, you can avoid this tax by investing in a life insurance policy of a higher premium, i.e., of a premium of ₹5,00,000 or more before 31st March 2023, because if you do so, then maturity proceeds from such a policy will be tax-free. But if you invest in the same policy after 31st March, that is, from 1st April 2023 onwards, then the maturity proceeds from such an insurance policy will be fully taxable.
Please note that this particular announcement was made for all the life insurance policies except ULIP. So, ULIP does not come under this particular tax rule.
Conclusion
These are some of the essential tasks you must do before 31st March 2023. This will ensure that once you enter the new financial year, your journey will be smooth as you have already taken care of tax savings and prevented yourself from paying any penalties. So, make sure that you follow this checklist and complete whichever tasks apply to you before the deadline of 31st March 2023.
Also Read: Key Highlights of Budget 2023
Disclaimer: The views expressed in the blog are purely based on our research and personal opinion. Although we do not condone misinformation, we do not intend to be regarded as a source of advice or guarantee. Kindly consult an expert before making any decision based on the insights we have provided.
