From the perspective of financial wellness, this checklist can assist you in ensuring that tax-saving investments have been made and compliance requirements have been met before the financial year comes to an end on March 31, 2023
Taxpayers need to ensure that all tax-saving investments are completed before March 31, 2023. But in addition to these, there are several other areas, too, that require equal attention. The most critical of these relate to linking the permanent account number (PAN) with Aadhaar. Here is a checklist of all the things that need to be completed before this financial year comes to an end.
Aadhaar-PAN Linking And Mutual Fund Nomination Registration
If PAN is not linked with Aadhaar by March 31, 2023, then the PAN will be deemed inoperative, and transactions that require PAN will not be permitted.
The Securities and Exchange Board of India (Sebi) has also made nomination mandatory for all mutual fund investors. If the nomination process is not completed by March 31, 2023, such folios will be frozen and no transactions will be allowed.
Make Use Of These Tax-Saving Options
Saving schemes, such as Public Provident Fund, National Pension System (NPS), Sukanya Samriddhi Yojana (SSY), Equity-Linked Savings Scheme (ELSS) of mutual funds, and life insurance premiums are some of the tax-saving options that qualify under the old tax regime. Investments in these schemes must be made before March 31, 2023 to be eligible for deduction under Section 80C of the Income-tax Act, 1961.
Capital gains on assets, such as in equities in excess of Rs. 1 lakh each financial year are treated as long-term capital gains (LTCG) and taxed at 10 per cent if those assets are held for more than one year. So, an investor can redeem an investment before the gains accumulate to Rs. 1 lakh. Such redemption can be done before March 31, 2023 to get the benefit of the tax-free limit of Rs 1 lakh for FY23.
Tax exemption will not be eligible on the maturity proceeds from life insurance policies with premiums above Rs. 5 lakh from April 1, 2023 onwards. So, to avail of the exemption benefit, such policies can only be taken till March 31, 2023.
Form 12B And Payment of Advance Tax
If you have changed jobs, be sure to complete Form 12B, so that the salary from your previous employer can be included in the tax calculation. Taxpayers with a tax liability exceeding Rs 10,000 must pay advance tax by March 15, 2023. You might have to calculate and pay advance tax if you have additional income, such as capital gains.
If you have not yet paid the entire advance tax liability for 2022-2023 by March 15, 2023, you have the chance to do so by March 31, 2023, after which, an interest of one per cent per month will be levied as penalty on the outstanding amount until fully paid.
Contribution To PMVVY
Contributions to the Pradhan Mantri Vaya Vandana Yojana (PMVVY), for building a retirement fund for seniors, can be made only up to March 31, 2023. PMVVY pays out a pension at the assured rate of 7.4 per cent for 10 years. The maximum investment allowed is Rs 15 lakh, which can give you a monthly pension of Rs 9,250. For a minimum investment of Rs 1.62 lakh, the monthly pension works out to Rs 1,000.
Special Tenure Fixed Deposits
A majority of banks are now offering special fixed deposit products with irregular tenures, which offer higher rates of interest than normal fixed deposits. Several of these special FDs, including those issued by the State Bank of India, HDFC Bank, IDBI Bank, Punjab and Sind Bank, etc., will expire on March 31, 2023. So, investors can consider investing in products with these banks.