Complete following tasks before March 31 to avoid penalties

As we approach the end of the current financial year 2022-23, one must complete important financial transactions before 31 March 2023 to avoid any inconvenience, financial losses, paying penalties and interests or facing other consequences.

Furnishing details of salaries received from previous employment

Salaried people who worked with more than one employer in a financial year are required to furnish details of their salaries from the previous employer/s in form Number 12B to the HR/Payroll/Finance department of the current organisation. The declaration of income from previous employers enables appropriate tax calculation and deductions for the employees' aggregate salary. Those who fail to furnish this will end up paying heavy interest under various sections of Income Tax at the time of filing the annual returns. The declaration of previous employment also removes the duplication in benefits such as exemptions and standard deductions.

Submission of tax saving proofs

Those who opted for the Old Income Tax Regime will have to make the investments to save tax. Most companies only entertain or accept the savings proofs after the deadline (usually 31 January or 15 February). Some companies may accept the savings proofs till the finalisation of March month's salary. Gather and submit your tax savings proofs, rent receipts, LTA claim etc., to your HR/Payroll/Finance department. Those who missed the bus and failed to submit the documents can still invest till 31 March 2023 in the schemes that will help them to save some amount for the current Financial Year. One can make investments, purchase insurance policies and ELSS units, deposit into PPF, NPS, and SSY accounts till 31 March and take the exemption and deduction benefits while filing the Income Tax Return. You must leverage available tax-saving options to save a lesser tax liability. One can still submit the tax savings, deductions and exemptions in the ITR and claim the refund for the excess income tax paid or deducted by the employer.

Filing of ITR-U

File your pending income tax return for the last Assessment Year 2020-21. 31 March 2023 is the deadline to file an updated income tax return (ITR-U) for AY 2020-21 (FY 2019-20). The Finance Act of 2022 introduced the concept of updated returns to allow a longer duration for an assessee to file the return of income.

Subscription to PMVVY

Pradhan Mantri Vaya Vandana Yojana (PMVVY) The Pradhan Mantri Vaya Vandana Yojana, an insurance policy-cum-pension scheme, was launched in May 2017 to provide social security and a regular income stream to senior citizens. PMVVY plan is provided by Life Insurance Corporation (LIC) in which Senior Citizens can invest up to Rs 15 lakh to get the guaranteed interest of 7.4 per cent for ten years. Applications for this are being accepted till 31 March 2023.

Tax harvesting

You can adapt the tax harvest strategy if you have made profits on your equity stocks and mutual funds. Tax harvesting is the strategy of selling a part of your shares and mutual funds to book long-term capital gains under section 112A and reinvesting the proceeds in the same shares or mutual fund units. You can book capital losses against capital gains by selling and buying those shares and mutual funds before 31 March 2023. Short-term capital losses can be set off against both long and short-term capital gains. However, long-term capital losses can be set off against only long-term capital gains.

Depositing the minimum contributions

Depositing the minimum annual contributions to PPF, NPS, and SSY accounts is a must before 31 March 2023. Irrespective of your Tax Regime and Tax Bracket, you must contribute PPF, NPS, and SSY account in your name, your spouse's, or your children's name. Self-contribution of Rs 1,000 in the NPS tier-I Account and Rs 250 into the tier-II NPS account for each financial year with no cap on the maximum contribution made. The minimum deposit of Rs 500 and a maximum of Rs 1.5 lakh in the PPF account for each financial year. The minimum annual contribution to the Sukanya Samriddhi Yojana Account is Rs 250, and the maximum contribution is Rs 1.5 lakh in a financial year.

Nominations to Demat Account

Existing Demat Accounts must have nominations. The deadline for making nominations was March 2022. However, SEBI has extended the deadline for existing eligible trading and demat account holders to nominate a beneficiary for their accounts to 31 March 2023 from 31 March 2022. The Demat Accounts will be frozen if nomination is not submitted through online or offline by 31 March 2023. Demat Account holders must make the nominations to avoid getting the account inactive. Individuals who want to open new trading and demat accounts have the choice of providing nomination or opting out of nomination through a declaration form.

Link PAN with Aadhaar

The Income Tax department has now made it mandatory to link all individuals' PAN with their Aadhaar. Aadhaar with PAN (Permanent Account Number) by 31 March 2023. If the PAN is not linked within the given due date, it will become inoperative from 1 April 2023.

Link Aadhaar with Voter ID

Link your Aadhaar with your Voter ID before 31 March 2023, even though the government has extended the last date to 31 March 2024 from 1 April 2023.

Donate to save tax under 80G

Giving back to society is a great way to reinvigorate one's life. Helping the needy is a duty of every humankind. There will never be a perfect time to donate, but one can take the end of the financial year as the opportunity to contribute to society. The warmth of kindness and feeling of giving back and contributing to the underprivileged is unparalleled. Make donations to NGOs such as Save the Children, Pratham Education Foundation, and The Akshaya Patra Foundation, to name a few. You can minimise your tax liability with contributions to NGOs under section 80G.

Renewal of policies

You must renew your Insurance policies, including life and medical insurance, by paying premiums before the due dates to keep your risk coverage intact. You may surrender the policies if you do not want to continue certain policies like endowment and money-back policies but do not make them lapse. Term Insurance and Medical Insurance are a must-have as they are beneficial in protecting your family from risk, loss of income, medical expenses and financial losses.

Update KYC with your banks

All bank account holders must update the KYC to avoid transaction disruption. Even though the deadline for updation of know your customer (KYC) details was 31 March 2022. Account holders can still complete the KYC formality to comply with RBI notification and activate their dormant accounts.

Paying advance tax arrears

As per section 208 of Income Tax, every person whose estimated tax liability for the financial year is Rs 10,000 or above must pay advance tax in four installments. The advance tax installments are in the ratio of 15 per cent, 30 per cent, 30 per cent and 25 per cent. Those who missed all the previous installments must pay the punitive interest along with the fourth installment by 31st March. In the case of salary income, the employer must deduct the income tax from their employees' salaries in equal installments. Salaried assessees with additional income like interest on deposits, rental income, taxable dividend income, capital gains from equity, debt, real estate, or any other income must pay advance tax apart from the TDS deducted by the employer.

(The author is a SEBI licensed Research Analyst. The alumnus of the Indian Institute of Foreign Trade (IIFT), he had held leadership roles at National Geographic, Reliance Radio Television Luxembourg, STAR TV)