Last day of financial year! Check the list of tasks to be completed to save income tax

Question: I have not done 80C investment yet. Can I do it on the last day of the financial year? What else can I do to save taxes

Sushmita, Bengaluru

Reply by Yeeshu Sehgal, Head of Tax Market, AKM Global. 

March 31 is an important day marking the closure of the financial year 22-23. This becomes even more important as there are some critical tasks which are required to be done before March 31. One such task is doing proper investments to take the tax deductions under the Indian Income-Tax Act 1961, if a taxpayer is under the old regime of taxation which includes investments in public provident funds, tax saver fixed deposits for the purposes of 80C deductions.

Other tasks include payment of advance tax before March 31, 2023 if a taxpayer has inadvertently forgotten to pay it in the instalment due on March15 since any tax paid on or before March 31 is an advance tax and interest under section 234B of the act shall not be attracted if the taxpayer has paid more than 90 per cent of the assessed tax. As per the act, advance tax shall be payable by the taxpayer during the financial year, if estimated tax liability of the taxpayer during that year is Rs 10,000 or more. 

The salaried taxpayers should submit Form 12B to their new employer, if they have changed jobs during the current financial year (i.e., between April 1, 2022, and March 31, 2023) and have not yet submitted. This will help the new employer to calculate total taxable income for the year and deduct the correct amount of tax along with the issue of Form 16 to the taxpayer accordingly.

Further, the debt funds have been proposed to be taxed as per the applicable slab rates of an investor with effect from April 1, 2023. Investors can invest in the debt funds till March 31, 2023, to enjoy the existing tax regime and avail a lower rate applicable to such funds. 

For the taxpayers who are looking forward to buying an Electric Vehicle, Section 80EEB of the act provides for deduction on the interest amount of loan taken for purchase of Electric Vehicle (EVs).Such interest deduction shall be allowed only if the loan is sanctioned by the financial institution between April 1, 2019 to March 31, 2023,subject to the maximum amount of Rs 1,50,000 once in a year.  The electric vehicle for the purposes of this section has been defined to mean a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy.

Also Read: Fixed deposits vs stocks vs gold vs real estate: Here’s how much money to invest in these assets in FY24