Tax saving tips for year end
There are several financial steps that the individual needs to take as the financial year comes to an end. Taxation matters are at the top of the list and hence there has to be a clear way in which the activities around this area are planned and executed. There are a lot of things that need to be wrapped up before the end of the financial year and the individual has to ensure that these are completed in time. Here are some of the details that need attention for every individual.
Completing required investments:
There is a tax benefit available for making specified investments during the year. More popularly known as Section 80C benefits there is a total of Rs 1 lakh that is available as a deduction when the individual invests from an available choice of areas. In many cases the entire limit is not exhausted by the individual before the end of the year and this represents a situation where the benefit is actually going waste. This is the reason why every person needs to take a careful look at the overall situation and then see whether there is any final amount that is left to be invested. If this is present then the individual would have to ensure that they complete this before the end of the financial year so that the tax impact is minimised. This is one of the primary tasks before every person so it has to be a priority as far as the completion of work is considered.
There are also some other obligations that arise in the month of March. It could include simple things like paying the medical insurance premium or the life insurance premium. The amount here has to be paid to ensure that the policies continue and this might also help in the overall process of saving some additional tax for the individual. There has to be a look at all these extra items that have to be completed in March to ensure that the deadline for this is not violated. This is important from the point of view of ensuring that all possible avenues on the tax front have been taken into consideration. Making some donations or ensuring that conditions related to some other deduction have been completed is a part of this process.
There might also be a situation where the individual would have to pay some advance tax before the end of the financial year. While the initial deadline for 15 March might have passed it does not make sense to wait for a few months till the final return is filed for the purpose of paying the tax. The better alternative in this situation is to actually ensure that the tax is paid before the end of March itself and this will take care of the requirements. There are two benefits to this whole process. The first one is that it reduces the outstanding requirement as far as the tax liability is concerned and two it also ensures that the interest liability on the individual is reduced. Both of these are important from the point of view of compliance for the individual. All or most of the liability that arises on the tax front should be completed by the individual in the year itself so that there is little that is carried over to the next financial year. This will be a good way to ensure that the requirements of the financial year are met in that year itself instead of being moved to some other time. Shifting the responsibility will not make it go away so it is better to ensure that it is cleared as quickly as possible.