There are just a few days left before the end of the Financial Year 2022-23. And as usual, every investor or earning member is supposed to complete a few important things before the end of FY. To avoid last-moment panic, in this blog, we are jotting down a few important points that would be helpful for you.
1. Linking your Pan Card with Aadhar Card
You must know that the last date for linking your Aadhaar with your PAN is 31st March 2023. After 31st March 2023, i.e. from 1st April 2023, your PAN number will become inoperative if it is not linked with your Aadhaar.
If you fail to do so, there are major consequences that you will face. A few of them are listed below,
- You will not be able to file your ITR.
- In case you have a pending retunes, that will not be processed.
- You will not get pending refund, if any
- A higher rate for TCS/TDS will be applicable
- Certain transactions you will not be able to do such as opening a bank account, purchasing Mutual Fund units exceeding Rs. 50,000/-, Cash Deposits exceeding Rs. 50,000/- during a day, etc.
You can link your Pan Card with Aadhaar through the official website of Income Tax as mentioned below.
2. Payment of Advance Tax
If your total tax liability is more than Rs. 10,000/-, payment of advance tax is applicable to you.
|Due Date||Advance Tax Payment (%)|
|On or before 15th June||15% of advance tax|
|On or before 15th September||45% of advance tax less advance tax already paid|
|On or before 15th December||75% of advance tax less advance tax already paid|
|On or before 15th March||100% of advance tax less advance tax already paid|
In case you have not yet paid the entire advance tax liability for 2022-2023 by 15th March 2023, then you still will be able to pay the same by 31st March 2023. From 1st April 2023, 1% interest per month will be charged on the due amount till the payment or filing of ITR.
3. Filing of Updated/Revised Income Tax Returns
In case you want to file an updated or revised ITR for F.Y.2019-20 (A.Y. 2020-21), the last date is 31st March 2023. After that, you won’t be able to update your return for F.Y. 2019-20.
4. Investing your money for Tax-Saving purposes
This point we rarely forget. To be eligible to get a tax deduction in FY 2022-23, investing in tax-saving investments before 31st March 2023 is important.
Please remember that this is not just limited to investment. This data is also applicable for expenses such as payment of premium of Health Insurance policy if you want that deduction.
There are many tax-saving options available in the market right now. When it comes to tax savings, one of the most popular investments is the Insurance policy. However, it offers lower returns & has a higher cost.
One of the most beneficial tax-saving investments that offer higher returns and have the shortest lock-in period is the “ELSS” i.e Equity-linked Saving Scheme. Being a pure equity product, the returns are not guaranteed & it is volatile in the short term.
However, there is a high possibility that ELSS will generate good returns in the long term as compared to other debt investments such as PPF, LIC, NSC, KVP, etc.
5. Filing of Form no. 12B
This is applicable only if you have changed your job between F.Y.2022-23. You will require to submit this form to your current employer. By doing so, your employer would know the income & TDS deductions already made by the previous employer. Hence, your TDS will be deducted accordingly. It will save you from penalties, additional taxes & other complications at the time of filling your ITR.
6. Tax Gain Harvesting
Tax-Gain harvesting is applicable when you sell shares or units of Mutual Funds and you made a profit by doing so.
Let’s see one example.
Mr. Kapoor has invested Rs. 10.00 Lakhs in Equity Mutual Funds for 5 years. Now, assume the amount after 5 years has become and grown to Rs. 17.50 Lakhs. So, Mr. Kapoor has gained Rs. 7.50 Lakhs. In this case how much tax he has to pay on Rs. 7.50 Lakhs?
As per LTCG (Long-Term Capital Gain) rules, a gain up to Rs. 1.00 Lakh is exempt from tax. So, as per the current tax structure, a 10% tax is applicable on Rs. 6.50 Lakhs. Hence, the tax amount would be Rs. 65,000/-.
If Mr. Kapoor had sold the MF units in every financial year in such a way that the gain amount is not more than Rs. 1.00 Lakh, this is called Tax-Gain harvesting. By doing so, Mr. Kapoor would not have the accumulative gain of Rs. 7.50 Lakhs at the end of 5 years. Tax-Gain harvesting will reduce taxes.
If you wish to take the advantage of this strategy, you should sell your investments before 31st March 2023 to reduce the liability on capital gains.
7. Investing in ‘PMVVY’
This is applicable only to senior citizens (above the age of 60). PMVVY is “Pradhan Mantri Vaya Vandana Yojana”. This is a Government backed scheme that can be bought through LIC.
The maximum investment limit in this scheme is Rs. 15.00 Lakhs with an assured interest rate @7.40% p.a. The extended last date for investing in this scheme is 31st March 2023.
8. Understanding the changes made in the taxation of the Insurance policy
In the recent budget 2023, there is a change in taxation on maturity proceeds of the life insurance policy. If you are someone who intends to invest in LIC with an aggregate premium of more than Rs 5.00 lakh in a year (be it one policy premium or collective premiums), you could do it before 31st March 2023 to save the tax on insurance maturity proceeds in the future.
If you invest in life insurance policies having a premium of more than Rs. 5.00 Lakhs after 31st March 2023, the maturity proceeds will be taxable.
This clause is not applicable for ULIP/s (Unit linked Insurance Plan).
If you manage these financial tasks properly, you can start the new Financial Year peacefully and without any penalties and backlog.
Follow this checklist and take actions as applicable to you.