• Notification Date: 28-03-2024
• Notification No: N/A

Income Tax Tasks to be Completed before March 31

As the financial year 2023-24 draws to a close, March 31 stands as an important date on every taxpayer’s calendar. It is a deadline that carries more weight than just the end of a fiscal period, as it signifies a flurry of essential tasks that need completion before the clock strikes midnight. 

One such critical task revolves tax planning and investment decisions. For taxpayers operating under the old taxation regime in India, March 31 serves as the cut-off for making investments eligible for deductions under Section 80C of the Income-Tax Act, 1961. From contributions to Public Provident Funds (PPF), to investing in tax-saving fixed deposits, individuals scramble to maximize their tax benefits before the deadline. 

Additionally, March 31 holds significance for those who may have missed paying their advance taxes by the March 15 deadline. Any tax paid on or before March 31 qualifies as advance tax, sparing taxpayers from the penalty under Section 234B of the Income-Tax Act, provided they have paid more than 90% of the assessed tax. “If a taxpayer has inadvertently forgotten to pay it in the instalment due on March 15, since any tax paid on or before March 31 is an advance tax and interest under section 234B of the act shall not be attracted if the taxpayer has paid more than 90% of the assessed tax. As per the act, advance tax shall be payable by the taxpayer during the financial year, if estimated tax liability of the taxpayer during that year is Rs 10,000 or more," said Yeeshu Sehgal, Head of Tax Market, AKM Global, a tax and consulting firm. 

The government collects tax in advance in the form of quarterly instalments during the financial year and it is not optional but mandatory requirement. It is paid in four instalments where 15% is paid by June 15, 45% by September 15, 75% by December 15, and 100 per cent by March 15, of the financial year. So, if you are a salaried individual but have other sources of income such as fixed deposits or rent, then you need to pay advance tax before 15th March 2024. Importantly, senior citizens who are 60 years or above and do not have any income from business are not required to pay advance tax.  

For salaried individuals who switched jobs during the fiscal year (between April 1, 2023, and March 31, 2024), submitting Form 12B to their new employer becomes imperative. This form aids the employer in calculating the total taxable income for the year accurately, ensuring the correct deduction of taxes and the issuance of Form 16 accordingly. “The salaried taxpayers should submit Form 12B to their new employer, if they have changed jobs during the current financial year (i.e., between April 1, 2023, and March 31, 2024) and have not yet submitted. This will help the new employer to calculate total taxable income for the year and deduct the correct amount of tax along with the issue of Form 16 to the taxpayer accordingly,” said Sehgal. 

Moreover, March 31 marks the final opportunity for taxpayers to file their updated Income-Tax Return (ITR-U) for the Assessment Year 2021-22 (financial year 2020-21). This deadline extension allows individuals who failed to file their returns on time to rectify the omission. “ITR-U can also be filed by an individual who was required to file ITR as per tax rules but did not do so by the due date. ITR-U cannot be filed to take the tax refund and an additional tax needs to be paid at the time of filing ITR U. The additional tax shall be equal to 50% of the aggregate of tax and interest payable by a person on the filing of the updated return. However, in case the updated return (ITR-U) is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year, the additional tax payable shall be 25% of the aggregate of tax and interest payable,” said Sehgal. 

As March 31 is approaching, taxpayers are busy ensuring compliance with tax regulations and financial-planning strategies before the fiscal year ends.