Complete These 8 Financial Tasks Before March 31 | Only 12 Days Left!!
Only 12 days are left for the end of financial year 2019-20!! Here are the 8 Financial tasks to complete before March 31, 2020 deadline. These financial tasks will not only help the individuals to get a tax rebate in the current financial year but will also help them in escaping the penalties by the concerned authorities.
8 Financial Tasks To Complete Before March 31, 2020
A detailed check list of crucial financial tasks which need to be done before the end of financial year 2019-20, is discussed here.
1. Link Your PAN to Aadhaar Card
- The Income Tax Department of India has issued an official notification to link PAN card to Aadhaar card before March 31, 2020.
- Your PAN may become inoperative if it is not linked to your Aadhaar by 31 March. Besides, there is a Rs 10,000 penalty if the two are not linked.
- The linking of PAN card to Aadhaar card can be done online by logging on to the income tax department website.
2. File Belated Tax Return for AY 2019-20
- If you have not filed a tax return for the FY 2018-2019, then you can still file it before March 31, 2020. Taxpayers won’t be able to file the belated tax returns after March 31, 2020.
- The deadline for filing a tax return for FY 2018-2019 was July 31, 2019. Therefore, a late filing penalty can be imposed.
- If the taxpayer’s annual income is below Rs.5 Lakhs, then a fine of Rs.1,000 will be imposed. While, if the income is above Rs 5 lakh, the penalty is Rs.10,000.
- The penalty for not filing the tax return is more stiffer. If the unpaid tax is more than Rs.10,000, the taxpayer may be prosecuted and fined.
3. Calculate your Tax Liability
- If you work for an organisation then the tax on salary will be deducted by the employer. However, if you are a self-employed professional or received income from other sources, you have to pay tax on this income yourself.
- If the tax payable on this income is more than Rs.10,000, the taxpayer is required to deposit advance tax. An advance tax can be paid using challan 280.
4. Check your Income for the year
- A lot of people don’t have a clear idea of exactly how much is their total income for the year. This is not a problem, unless they fall very close to the Rs.5 lakh threshold. If your income is up to Rs.5 Lakh, there is no tax payable due to the relief available under Section 87A.
- But if the income exceeds this threshold of Rs.5 Lakh, the relief vanishes and pushes up the individual’s tax liability by Rs.13,000.
- Calculate your total income from all sources (including interest on savings bank balance, bank deposits and capital gains).
- If it is above Rs.5 Lakh, you have time to bring it down. Donations to specified organisations, purchase of medical insurance for self, family and parents and contributions to the NPS are also eligible for tax deduction. These are over and above the Rs.1.5 Lakh tax savings under Section 80C.
5. Make Tax Saving Investment in FY 2019-20
- If you are yet to exhaust available tax-deduction benefits through eligible investments and insurance purchases to lower your tax burden in FY2019-20, you must do so before March 31, 2020.
- Taxpayers often do not take stock of their existing tax-saving measures and hence fail to accurately assess their tax-saving needs.
- Under Section 80C of the Income Tax Act, a taxpayer can get deduction benefit up to Rs.1.5 lakh. So, if you fall in the highest tax bracket and your existing tax-saving measures are less than this limit, you can invest more in order to maximize the benefit. PPF, EPF, ELSS, Tax Saver FDs, Senior Citizen Savings Schemes, Sukanya Samriddhi Yojana are most popular tax saving investment options. Each option is explained in detail with examples at our taxyadnya website.
- You can also invest in the National Pension Scheme (NPS) and claim further tax deductions up to Rs.50,000 under Section 80CCD.
- However, you should note that your last-minute tax-saving investments and insurance purchases should ideally be in line with your financial goals, insurance requirements, risk appetite and liquidity demands.
6. Book Profits on your Equity Investments (Stocks & Equity Funds)
- Though the market is in red, but many investors are sitting on long-term capital gains. The Long-term Capital Gains (LTCG) above Rs.1 lakh in a financial year are taxable.
- You can go for profit booking of your LTCG. You can reset the buying price by following a simple strategy. Just sell your stocks and funds before 31 March and then buy them back. Selling and buying back will reset the buying price.
- This strategy will also cost you 1% by way of brokerage paid on the sale and purchase transactions. Yet, it is a smart move that can reduce your future tax by harvesting the tax-free gains of up to Rs.1 Lakh in a year.
- For mutual fund investors there will be no costs because entry loads have been removed and exit loads don’t apply if funds are sold after a year. Consult your advisor so that you can optimize your tax on capital gains.
7. Buy Health Insurance that Covers COVID-19
- After WHO declared COVID-19 as a pandemic, health insurance against it will not only bear your medical expenses but will also give you a tax rebate up to Rs.25,000. So, protect yourself and your family by buying health insurance for your family and parents right away.
- One can claim deduction for medical insurance premium of up to Rs.25,000 for yourself and your family.
- There is an additional deduction of Rs 25,000 if you buy health insurance for your parents. If even one of them is a senior citizen, the deduction is higher at Rs.50,000.
- You can avail these deductions in the current financial year if you buy before 31 March.
8. Buy a Term Insurance Cover
- The best way to get a high cover within a low price is life insurance’s term plans.
- From April 1, there will be a rise by 20% in the premiums of term plans due to a revision in reinsurance rates.
- Despite a rise, everyone should know the importance of the life insurance premiums. If you have not yet bought a term plan, do so now.