As we are heading to the end of the financial year 2023-2024, these are the things one must do to avoid complications of any form. Income Tax department has announced March 31 as the deadline to complete these tasks. The 2024-25 financial year is all set to commence from April 1.
To do list under income tax before March end
1. Advance tax
If your total tax liability is Rs 10,000 or more in a financial year you have to pay advance tax. The advance tax applies to all taxpayers, salaried, freelancers, and businesses. And People aged 60 years or more, and do not run a business, are exempt from paying advance tax. So only senior citizens (60 years or more) having business income must pay advance tax
Advance Tax Due Dates For FY 2023-24
FY 2023-24 for both individual and corporate taxpayers
|
Due Date |
Advance Tax Payment Percentage |
|
On or before 15th June |
15% of advance tax |
| On or before 15th September |
45% of advance tax (-) advance tax already paid |
| On or before 15th December |
75% of advance tax (-) advance tax already paid |
| On or before 15th March |
100% of advance tax (-) advance tax already paid |
For taxpayers who have opted for Presumptive Taxation Scheme under sections 44AD & 44ADA – Business Income
|
Due Date |
Advance Tax Payment Percentage |
| On or before 15th March |
100% of advance tax |
Read also : ITR–U: Last date to File ITR for FY 2019-20, 2020-21 and 2021-22
2. Tax harvesting of share market
Tax loss harvesting is a strategy of selling underperforming stocks or mutual funds in your investment portfolio to offset capital gains and reduce your tax liability. By doing so, you can enhance your post-tax returns on your portfolio.
Individual taxpayers do not have to pay income tax on long-term capital gains (LTCG) up to Rs 1 lakh earned on the sale of equity shares or equity-oriented mutual funds. Gains from selling of equity shares and equity oriented MFs is considered long-term if it is sold after holding for 12 months or more. However, this exemption is specific to the relevant financial year, and it cannot be carried forward to the next years. So, if you do not sell your holding and continue accumulating gains for a longer period and withdraw a bigger gain, you will need to pay income tax on gains above Rs 1 lakh applicable to that financial year.
Tax loss harvesting starts with the sale of the stock or an equity fund that is experiencing a consistent price decline. You feel that the security has lost most of its value and chances of a rebound are bleak. Once the loss is realised, you offset it against capital gains that your portfolio has earned over the period.
Let’s understand Tax loss harvesting with an example. Suppose in a given financial year your portfolio made an STCG and LTCG of Rs 1,00,000 and Rs 1,05,000 respectively. The short-term capital losses were Rs 50,000.
Tax payable (Without tax loss harvesting) = [(Rs 100,000 15%)+ { (105,000-100,000)10%}] = Rs 15,500
Tax payable (With tax loss harvesting) = [{(Rs 100,000-Rs 50,000) 15%)}+ { (105,000-100,000)10%}] = Rs 8,000
The process of selling stocks to harvest losses and save on taxes is known as tax loss harvesting. In this example, you can save Rs 7,500 in taxes by using this strategy.
Read also :Small tax demands up to ₹1 lakh waived, relief for income tax payers
3. MSME
According to the Income Tax Law 43B (h) in the Finance Act 2023, in order to ensure timely payments and maintain uninterrupted cash flow, the companies need to make payments to the MSME sector within 45 days.
A new regulation for the assessment year 2024-25 has been enforced by the central government, mandating that purchasers settle payments for goods procured from MSMEs within 45 days of delivery. Furthermore, all outstanding dues to MSMEs must be cleared before March 31, 2024. Failure to adhere to these timelines will result in the pending payment being treated as income, subject to taxation.
Read Also: Payments to MSME creditors on time is must now: Read all FAQs
4. Invest To Save Tax
Investing in various instruments that qualifies for deduction under various income tax section such as under Sec 80C with a maximum limit of Rs 1,50, 000 assessee can save tax upto Rs 46,800. Provided the assessee do all the investments before 31st March, then only he can claim the tax benefit. However, before you choose instruments to save taxes, make sure it fits into your portfolio or requirement. Remember, tax saving should be incidental and not the primery reason behind selecting a product to invest in.
5. ITR-U for AY 2021-22
Last date to file ITR (Income Tax Return) under section 139(1) for FY 2020-21 or AY 2021-22 is gone, however, still one can file Income Tax Return. The Finance Act, of 2022 has introduced a new concept of updated Income Tax Return (ITR-U), which has permitted taxpayers to file their ITRs after two years of due date of the filing, subject to payment of additional taxes.
For FY 2020-21, the ITR-U can be filed by 31st March 2024 with 50% of aggregate of tax and interest payable.
Read Also: GST: 4 important tasks you must do before March end
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