As we are approaching the finish of the economic year 2020-21, there are particular tax tasks which we need to have to comprehensive by the 31st March 2021. Let us talk about these tasks in detail.
1. Submitting the facts of salaries received from earlier employer
If you are a salaried particular person and had been employed with more than one employer in the present year, please furnish facts of your salaries from the earlier employer/s in Form No. 12B, to your present employer quickly so as to make certain suitable tax deductions on your aggregate salary earning is created by the present employer. In case you fail to do so, you may perhaps get a shock at the time of filing of your earnings tax return (ITR) getting that you have big tax (along with interest) to spend. This occurs simply because all the employers would have provided the positive aspects of initial exemption as effectively as different deductions, resulting into deduction of reduced tax on aggregate basis.
2. Submit the proof of expenditures to your employer
There are particular exemptions which are readily available to staff on expenditures really incurred. For things like House Rent Allowance (HRA) and Leave Travel Assistance (LTA) unless you submit the vital documents, the employer will treat these allowances as taxable and deduct tax thereon. If you fail to submit the documents, you can nonetheless claim these things as exempt and claim the refund for the excess tax even though filing your ITR.
3. Verify quantum of deductions readily available from your bank records
Most of us use ECS debit facility for things like life insurance coverage premium, SIP for equity linked saving schemes (ELSS), residence loan EMIs and so on. It may well have occurred that, due to any cause, the ECS may well not have been debited. Likewise, even in case you have issued a cheque for such things, the identical may well not have been but presented to the bank. So please confirm the facts from your bank statement and cross verify that for all the eligible deductions factored into by you amounts have been debited in your bank account. In case some things have not been debited, please make certain that either the payment is created for the identical or investments are created in any alternate solution readily available prior to the year finish.
4. Payment of advance tax
You are needed to spend advance tax on your present year’s earnings, in case your net tax liability for the year just after minimizing the tax deducted at supply from all the sources exceeds ten thousand rupees. Senior citizens not engaged in any business enterprise or profession are not needed to spend advance tax. Though advance tax has to be paid in 4 instalments in the ratio of 15%, 30%, 30% and 25%, but in case you miss all the 4 instalments, at least spend the identical by 31st March, as advance tax paid by 31st March is also treated as advance tax. Failure to spend sufficient advance tax attracts punitive interest.
Even if you are salaried and tax has been deducted from your salary, you nonetheless have to spend advance tax on any other earnings like rent, interest, dividend, capital gains and so on. in case the aggregate tax liability exceeds Rs 10,000. For self-employed exactly where the tax deducted is not adequate adequate to cover the aggregate tax liability, they also have to spend advance tax. Even in instances of interest earnings exactly where the tax is deducted at supply at the price of 10%, you may perhaps nonetheless have to spend advance tax in case you are in a greater tax slab.
5. Minimum contribution to PPF account and NPS account
In case you have a PPF account either in your personal name or in the name of youngsters or spouse, you have to contribute minimum Rs 500 every single year in every account to stay clear of the account becoming dormant. A dormant account can be created active by payment of a nominal quantity and contribution of Rs 500 for every year of default. Likewise, in case you have an NPS account, you need to have to deposit minimum of Rs 500 every single year in your account failing which the account gets frozen. A frozen account can be reactivated by paying a nominal penalty and one time contribution of Rs 500.
6. File your pending earnings tax return for economic year 2019-2020
In case you have not but filed your earnings tax return for the final economic year, i.e. 2019-2020, you have the final possibility to file it by 31st March 2021, that also with penalty.
7. Book extended-term capital gains on listed shares and equity mutual funds schemes upto Rs 1 lakh
Section 112A extended-term capital gains on listed equity shares and equity-oriented schemes are completely exempt upto Rs 1 lakh and the balance is taxed @10%. So you can book extended-term capital gains upto one lakh of rupees prior to march 31st March, 2021 in case not but booked. In case you have created these investments for extended term, you may perhaps make a decision to sell the shares the identical day and invest in the identical next day or carry out these transactions with unique brokers on the identical day. The acquire and redemption of the units can be accomplished the identical day. By this technique you can minimise your general tax liability.
I am certain this discussion will enable you in taking far better care of your investments and taxes.
(The writer is a tax and investment professional, and can be reached at [email protected])