Have you done financial planning for 2017-18 before the deadline 31st March 2018 – Check out what you missed?

Law & Audit Taxation

Financial year 2017-18 is reaching to its ends in few weeks. 31st March is an important deadline with reference to tax Planning, missing it may result in higher tax liability. We are required to complete our tax planning before 31st march 2018, as we are required to file Income tax return for FY 2017-18 during 2018-19. For claiming many deductions and exemptions in our income tax return, we need to invest before 31st march 2018. So if you have not completed your tax planning for FY 2017-18, you are left with few weeks only. For your reference, given below is the list of ten important financial decisions which are required to be taken before 31st march 2018.

Decision regarding long term capital gain in your portfolio

In budget 2018, Long term capital gain (covered under STT) above Rs. 100000/- are made taxable @ 10%. This tax on long term capital gain will be applicable w.e.f. 01-04-2018. Hence upto 31-03-2018, all long term capital gains (covered under STT) are exempt u/s 10(38). Hence you have to decide regarding LTCG on the basis of your equity planning and market price of your portfolio:-

  • You may consider booking long term capital gain upto 31-03-2018, which will be tax exempt.
  • You may decide not to book your LTCG upto 31-03-2018, but book LTCG only upto Rs. 100000/- (exemption limit) on yearly basis because market in down in Feb.-2018 and you may decide to wait for good price of your portfolio.

Decision regarding Investment to claim deduction U/s 80C

U/s 80C a deduction of Rs 1,50,000 can be claimed, it means An Individual or HUF can reduce your total taxable income up to Rs 1,50,000 from through section 80C. Section 80C provides list of investments/ expenditures which is allowed as deduction. If you are short of limit u/s 80C, you are left with only few days to consider option best suitable to you. List of some important investment deductible u/s 80C is given below:

  • PPF (Public Provident Fund)
  • EPF (Employees’ Provident Fund)
  • 5 years Bank or Post office Tax saving Deposits
  • National Savings Certificates (NSC)
  • ULIPs
  • ELSS Mutual Funds (Equity Linked Saving Schemes)
  • Children’s Tuition Fees
  • Life Insurance Premium
  • Sukanya Samriddhi Account Deposit Scheme
  • SCSS (Post office Senior Citizen Savings Scheme)
  • Repayment of Home Loan (Principal only)
  • Subscription to deposit scheme of a public sector or company engaged in providing housing finance
  • Contribution to notified Pension Fund.
  • National Pension System
  • NABARD rural Bonds
  • Contribution to notified annuity Plan of LIC.

Decision regarding contribution to NPS u/s 80CCD(1B)

U/s 80CCD(1B) a deduction of Rs 50,000 can be claimed which is over & above the limit of Rs. 150000/- u/s 80C. If you are in 30% Tax bracket then making an contribution to NPS is going to save immediate Rs. 15000/- of your tax. You may decide to open an NPS account if you have not opened earlier or contribute to earlier opened account.

Decision regarding continuity of social security schemes.

If you have chosen to invest in any social security schemes like Public Provident Fund (PPF), National Pension Scheme(NPS) or Sukanya Samridhi Yojana (SSY) etc. which requires a minimum amount to be deposited in every year to keep them active. If you forgot to invest the minimum amount in these schemes, then you have to pay a penalty along with unpaid amount to make the scheme active again. Make sure that you have deposited at least minimum amount before 31st march 2018.

31st March is last date to file your Income tax return for FY 2015-16 & 2016-17

If you have not filed your income tax return for financial year 2015-16 or you want to revise your income tax return for 2015-16(only if assessment is not yet completed & you have filed original ITR on time) then it is last chance for you because 31st march 2018 is the last date to file your belated or revised income tax return for the FY 2015-16.

OR

If you have not filed your income tax return for financial year 2016-17 , you can file belated return only upto 31-03-2018. Belated return filed for FY 2016-17 can also be revised upto 31-03-2019.

As per section 139(4):-

  • upto to FY 2015-16- belated return could be filed at any time before completion of one year from the end of assessment year or before completion of assessment whichever is earlier.
  • From FY 2016-17- belated return can be filed at any time before the end of assessment year or before completion of assessment whichever is earlier.(form FY 2016-17, a belated return can also be revised)

As per section 139(5):-

  • upto to FY 2016-17- revised return could be filed at any time before completion of one year from the end of assessment year or before completion of assessment whichever is earlier.
  • From FY 2017-18- revised return can be filed at any time before the end of assessment year or before completion of assessment whichever is earlier.

Payment of tax liability including Advance tax.

If you are filing ITR for FY 2015-16 or 2016-17, you need to add interest u/s 234A , 234B or 234C (if applicable) in your tax amount. Further in respect of FY 2017-18, If your tax liability is more than Rs. 10000/- then make sure that you have paid all tax dues as advance tax. If any sum is pending make sure that it is deposited before 31st march 2018 to reduce your interest liability u/s 234B & 234C.

Furnishing detail of other income and Investment to your Employer

Salaried Individuals are required to furnish their details of other income and Investment to their employer so that this detail is considered by your employer while deducting tax at source. Different employer provides different time limit for furnishing such detail. But employer may consider your detail, before deducting tax at source in respect of last month of financial year i.e. march-2018 depending on procedures required to be followed. If you have not furnished such detail to employer then ask your employer and do it immediately.

Decision regarding other deduction available u/s 80D, 80DDB etc.

If you paid your Health insurance premium for mediclaim policy for Self, Spouse or dependent children is tax deductible upto Rs 25,000. If any one of the persons specified is a senior citizen  and Mediclaim Insurance premium is paid for such senior citizen then the deduction amount now is Rs. 30,000. Additional deduction for Health Insurance premium paid for parents is tax deductible upto Rs 25,000. If your parents are senior citizens then the maximum allowable deduction is Rs 30,000.

U/s 80DDB, A deduction Rs. 40,000/- or  amount actually paid on himself or dependent relative for medical treatment of specified disease or ailment, is available. The diseases have been specified in Rule 11DD. In case of senior citizen the deduction can be claimed up to Rs 60,000 or amount actually paid, whichever is less. For very senior citizens Rs 80,000 is the maximum deduction that can be claimed. You may plan to incur medical expenditure before or after 31st march 2018 depending upon your tax liability in FY 2017-18 and 2018-19. For example, If person is under 20% slab rate who will be under 30% slab next year. Then expenditure incurred after 31st march 2018, will save more tax than expenditure incurred upto 31st march. It is only for tax planning purpose, your medical requirement are primary so decision may vary.

Ensure that you have you have done respective expenditure/investment to claim deduction under chapter-VI-A.