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The Only Checklist you Will Need Before the Financial Year Ends

Author: Samrat Saini
by Samrat Saini
Posted: Apr 21, 2019

The manner in which you close your current financial year will set the tone for the next one. If you reside in India, you’d be required to take care of all your legal financial obligations by 31st April every year. Instead of waiting for the deadline to loom in and disrupt your busy schedule, you can start planning for the financial year end in advance.

If you’re new to this, you can ask for expert assistance from banks or other financial institutions. This would help you understand tax filing and investments better. If you prefer taking charge of the process yourself, then here’s a list of to-dos to help you with it.

1. Pay off tax in advance

Paying off your taxes before the financial year ends is a convenient way of avoiding all the last-minute paperwork. For instance, for the last financial year, one could have filed for advance income tax payment on or before 15th June 2018, 15th Sept 2018, 15th Dec 2018, and 15th March 2019.

If you don’t pay at least 90% of your taxable amount by way of advance tax on or before 31st March of every year, then an interest will be charged to your portfolio from 1st April till you clear all your liabilities.

2. Balance your portfolio

Increase the returns from your portfolio by distributing your funds well. For instance, let’s assume that in the last financial year, stocks outperformed bonds, which is why you invested 40% of your savings in stocks and 20% in bonds. But this year, your bonds gave a higher return on investment. In such cases, you can sell some of the stock to buy new bonds to increase your returns.

On the other hand, if you have invested in FDs, then use an FD maturity calculator to determine how much you’ve earned over the last financial year.


3. Rework the losses

If the tax levied on investments like stocks, shares, and equities is higher than the profit you earn from them, then holding on to these assets would add to your losses. To reduce your tax burden in the future, you should consider selling these assets.

However, it makes more sense to sell your short-term investment assets and gain marginal profits. It’s not advisable to sell your long-term assets as that can impact your investment profile.

4. Discontinue overvalued and underperforming assets

If you come across any investment assets that have consistently underperformed then instead of continuing them, you should discard them. For example, if you’ve invested in Mutual Funds, look out for assets that have underperformed in the last 3-4 quarters.

That said, if you’ve stocks that have performed exceptionally well in the recent past, you can sell them whilst they still have a high value. Both these moves will help you reduce the risk factor of your portfolio.

5. Calculate the taxes due

If you missed paying taxes in the previous year, then remember to include them with this year’s filing. Collect the receipts and calculate returns on investment before you file for taxes. You’d be asked to submit these records to your employer if you’re a salaried individual. Any delay in submission of these documents can lead to extra TDS being deducted from your salary.

n case you have additional income from investment instruments like Fixed Deposits and Mutual Funds, the income earned from it is taxable. You would be charged a penalty of 1% on the interest if you fail to pay what you owe.

Taxes are also applicable to long-term capital gains from the sale of a property or Mutual Funds. Senior citizens who aren’t currently employed or don’t have a source of income don’t have to pay this tax.

6. Include tax deductions and benefits

Have you recently bought a place of your own with the help of a Home Loan? If yes, then remember to claim a tax deduction on the principal amount and the interest of the loan. Under Section 80C and Section 24 of the Income Tax Act 1961, you can claim up to Rs.1.5 lakh on the principal amount and Rs.2 lakh on the interest for a self-occupied property. You can also file for tax redemption on the stamp and registration fees, and an additional tax deduction of Rs.50,000 from the interest charges, for a home loan of up to Rs.35 lakh if you’re a first time buyer.

If you’ve registered your Mutual Funds under the SEBI Act, 1992, then it’s exempt from tax under Section 10 (23D). You can also opt for Tax-saver Fixed Deposit, the best low risk, high returns Fixed Deposit in the market if you want to save on these expenses. Additionally, you can also split your FD investments into different accounts to avoid paying TDS.

By taking care of these steps you would be able to review your finances and understand your financial standing. You would also get clear insights on how you can improve your balance sheet and plan your budget for the upcoming year.

About the Author

Tired of dealing with all the paperwork taxes call for? Here’s how you can stay ahead of others and close the financial year like a pro.

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Author: Samrat Saini

Samrat Saini


Member since: Mar 13, 2019
Published articles: 1

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