Financial Tasks to be Completed Before 31st March 2017
Fiscal 2016-2017 is approaching a gradual end. There are a lot of things that happened in the nation. From surgical strikes to demonetization, from “Baluchistan Bomb during Independence Day” to merger of Railway Budget with General Budget in Parliament, from spike in “Make in India” to completion of largest single-location solar power plant – the fiscal year 2016-2017 witnessed some of biggest changes in India that Indians only dreamed of in pre-Modi era.
However, it is high time that we swing our heads and fixate our eyes on something more important on an individual scale – our finances! With gradual closing of fiscal year 2016-2017, we need to take care of a few financial tasks to ensure that our books are clean and we do not get into any kind of trouble. So, what are those financial tasks that should be completed before 31st March? Here is a quick list:
Old Note Exchange
Demonetization was like a bomb that suddenly and unexpectedly blasted, shaking the whole Indian economy to its very core. Good thing – India desperately needed that shaking. With 500 and 1000-rupee currency notes taken out of circulation, India faced a serious cash crunch. However, people walked along, supporting the move. Government allowed people enough time to submit the old notes in their possession. Those who failed to do so will now have one last chance. By 31st March, they need to submit the old notes. In case you still have your old notes stashed somewhere, find them and have them exchanged. Only problem, this time you will not be allowed to exchange those notes anywhere else apart from offices of Reserve Bank of India. Reserve Bank of India has 19 such branch offices where these notes can be exchange and no more than INR 2000 worth of currency notes can be exchanged per person. Also, you will have to disclose verifiable source of those notes. Failure to do so may attract legal action.
File IT Returns for FY 2015-2016
The current Union Government has taken a hardliner stance on tax evasion, corruption and black money. So, tax filing is in your best interest if you want to avoid legal hassles. You will have time till March 31, 2017 to file you IT Return for FY 2015-2016 and assessment year (AY) 2016-2017. You need to ensure that you file your taxes within that date. Failure to comply will attract penalties if taxes are filed after that date. The penalty that will be levied will be of the tune of INR 5,000. You don’t want to take that hit, do you?
File IT Returns for FY 2014-2015
For previous fiscal and assessment year, that is 2014-2015 and 2015-2016 respectively, IT filing’s last date was given as September 2016. However, those who did not manage to abide by the timeline can now enjoy extended timeline till March 31, 2017. This extension has been given to ensure that people file their taxes properly and evade any legal action that can be taken against them. In case you happen to miss this deadline for belated returns, the Income Tax Department has full rights to decline your IT return post 31st March, 2017 and actions may be taken against you.
If you are aiming for investments for the sole purpose of saving taxes, you need to ensure that you invest before March 31, 2017. The investments that you make before that date will be counted as tax-saving investments for the Fiscal Year 2015-2016 and Assessment Year 2016-2017. Any investment after 31st March will not be eligible for tax deductions in this fiscal. They will be counted only and only for next fiscal.
While there are many options available, you need to do at least two things:
- Keeping PPF active: If you have a PPF account, it is mandatory that you invest INR 500 (minimum) in any given fiscal. This investment has to be made before the current fiscal comes to an end, that is prior to March 31, 2017. Failure to pay the minimum amount will mean INR 50 in penalty. Also, whatever amount you invest in PPF will be tax deductible provided the maximum limit of INR 1.5 lakhs in a given fiscal year is not overshot.
- Keeping your NPS account active: It is mandatory that you invest INR 1,000 in you NPS account in every fiscal year. However, you can always invest more subject to a maximum cap of INR 1.5 lakhs in a fiscal year. Failure to pay INR 1,000 towards NPS will attract penalty. First your account will be frozen and then when you try to reactivate your account, a penalty will be charged. Make sure that you invest within March 31, 2017. This is applicable in case of Tier I accounts only.
Advance Tax Payment
The government introduced the system of Advance tax where a taxpayer needs to pay his or her tax liability in several instalments over the course of the fiscal year. These instalment dates are decided by Income Tax Department and the whole system eliminates the concept of paying lump sum tax at fiscal yearend. There is another name for this system. It is known as ‘pay-as-you-earn tax’.
If, in a fiscal year, a taxpayer is liable to pay INR 10,000 in taxes, he or she will have to, mandatorily, opt for Advance Tax. Those who fall under this Advance Tax condition include salaried individuals, business entities and even freelancers. No one can skip this option.
Advance Tax is not applied on people who are between the range of 60 years and 80 years of age (that is, senior citizens) and those who have age higher than 80 years (that is, very senior citizens).
This Advance Tax is not applicable if a business entity goes for Presumptive Tax for fiscals 2014-2015 and 2015-2016. In such a case the business will have to assume that its income will be 8% of yearly turnover and it has to pay taxes accordingly. However, this rule changed for fiscal 2016-2017 wherein taxpayers had to pay whole tax in single-installment advance and the due date for such payment is March 15 or earlier.
The provision for presumptive tax scheme has been spelled out in two sections of Income Tax Act, which are 44AD and 44AE. Before budget 2017, presumptive tax scheme was limited only and only to business entities. However, budget 2017 extended the facility to those people as well who are professionals.
Presumptive tax option or scheme for fiscal 2016-2017 will be offered to only and only those business units which have less than INR 2 crores of turnover.
For fiscal 2016-2017, individuals (architects, lawyers, doctors etc.) who have annual income of INR 50 lakhs or less than that can go for Presumptive Tax.
Advance Tax Payment Due Dates
The Income Tax Department has provided the due dates for advance tax and the instalment percentages as well. The table below provides the necessary information:
|Due Date||Percentage of tax to be paid in advance|
|June 15 or earlier||15% of tax to be paid in advance|
|September 15 or earlier||45% of tax to be paid in advance|
|December 15 or earlier||75% of tax to be paid in advance|
|March 15 or earlier||100% of tax to be paid in advance|
Okay, we are now done with the list we promised in our article title. There isn’t much that you need to do – only a handful of financial tasks. However, if you think we have missed some, feel free to send us the information through the comments section.