If you are not a time traveller and do not want to regret on 31st July 2024 after looking at the additional tax you need to pay on your income of the last financial year, plan it now.
4 months from now, you may wish you had planned your affairs today.
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What is going to happen in 4 months?
31 July 2024 is approximately four months from now. And it is the last date to file your income tax return.
If you are not a time traveller and do not want to regret on 31st July 2024 after looking at the additional tax you need to pay on your income of the last financial year, plan it now.
When the current financial year ends, there will be certain things you cannot do in the new financial year or will have the cost of doing that. Whether filing updated returns, making tax-saving investments, or paying advance taxes to avoid penal interest, taxpayers need to keep several things in mind in the next few days. In this article, we have discussed some last-minute things that taxpayers must do before the year ends to ensure they comply with the tax laws and regulations.
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Investing in foreign shares
If you want to invest in foreign shares, the foreign currency you buy for the purpose shall be subject to TCS provisions. The authorised dealer shall collect tax at the rate of 20% if the aggregate of remittance exceeds Rs 7 lakh in a financial year. This limit is applicable for every year, so if you want to invest in the US market, it is the right time to add the funds up to Rs 7,00,000 till 31st March and from 1st April, you have another Rs 7,00,000 limit. So, you can invest up to Rs 14,00,000 in the US stock market without fearing about the TCS.
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Postpone the decision to sell a capital asset
If you plan to sell a long-term capital asset this year, hold it until the new financial year begins. This will allow you to claim the indexation benefit for the next financial year. For example, if you sell a long-term capital asset on 01-04-2024 instead of 31-03-2024, the indexed cost of acquisition will increase by approximately 5%, eventually reducing the tax burden. Further, you get the additional time to explore lucrative investment opportunities that align with your financial goals.
Furnishing of Updated Return
A person can file an updated return regardless of whether he has earlier filed an original, belated, or revised return for the relevant assessment year. A taxpayer can file an updated return within 24 months from the end of the relevant assessment year. This allows taxpayers to rectify any errors or omissions in their previous filings. The last date to file the updated return for FY 2020-21 (A.Y. 2021-22) is 31st March 2024.
Make your tax savings investment
Certain deductions are allowed from an assessee’s gross total income while computing the total income. An Individual or HUF is eligible to claim a deduction of Rs. 150,000 for certain investments, deposits, or payments under section 80C. The deduction under this section is allowed if the amount is invested in PPF, NSC, ULIP, ELSS, LIC, tax-saving FDs, etc. The deduction is allowable in the year in which payment is made. Therefore, taxpayers must make investments on or before 31 March 2024 to claim a deduction under this section for the Assessment Year 2024-25.
Payment of Advance Tax
Every assessee is liable to pay advance tax if his estimated tax liability for the financial year is Rs. 10,000 or more. The advance tax is payable in four instalments on or before the prescribed due dates. The taxpayers are required to deposit the last instalment of advance tax on or before March 15 of the previous year. However, any tax paid on or before 31st March is also treated as advance tax paid during the financial year. If the assessee fails to pay the advance tax as per the provisions, he is liable to pay the interest under Sections 234B and 234C. Therefore, to avoid any interest liability, paying advance taxes on or before 31st March 2024 is recommended.
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Submission of documents to the employer
The employer is required to obtain evidence or particulars of the deductions claimed by the employee to estimate the taxable income and the amount of tax to be deducted thereon. These details are to be provided in Form No. 12BB.
If the employee cannot provide actual evidence, his employer will not consider these deductions while determining his tax liability. This can result in higher TDS deductions. Moreover, if you claim these deductions in the ITR, a mismatch in Form 16 and your ITR shall be flagged, and your AO may make an enquiry.
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Donations
Every assessee who has paid any sum as a donation to the prescribed funds, institutions or associations, etc. is eligible to claim a deduction under Section 80G. Further, donations made to political parties can also be claimed as a deduction under section 80GGB or 80GGC. These deductions can be claimed only if the donations are made during the financial year. In order to claim a deduction under these sections, taxpayers are required to obtain the receipt of such donations along with the PAN of such institutions, or political parties as the case may be. Also, remember that you need a certificate of donation in Form 10BE to claim a deduction under Section 80G. However, this certificate shall be provided by the donee trust on or before 31st May of the financial year immediately following the financial year in which the donation is made.
Leave Travel Concession
Leave Travel Concession (LTC) is an employee benefit that incentivises employees to take vacations and provides them with tax benefits for their travel expenses within India. The expenses incurred under LTC in a financial year are exempt from tax up to a certain limit. To avail of this exemption, employees must go on vacation on or before 31st March and furnish documentary evidence, such as travel tickets, boarding passes, and hotel bills, as proof of their travel expenses to their employer.
Loss Harvesting
Loss harvesting involves strategically selling investments at a loss to offset capital gains, thereby reducing taxable income. Selling the loss-making shares and offsetting these losses with capital gains is a tax-saving approach. It is essential to note that long-term capital losses can only be set off against long-term capital gains and not against short-term capital gains, despite falling under the same head of “capital gains”. However, the short-term capital losses can be set off against any capital gain, whether short-term or long-term.
Furnishing of Form 15G/15H
An individual can file a declaration for no tax deduction in Form 15H if he is a Senior Citizen and in Form 15G in other cases. The declaration in Form No. 15G/15H can be furnished both in paper format and electronically. When the recipient gives a declaration along with his PAN, the payer will not deduct tax at source. Do remember to furnish this declaration on or before 31st March.
