While in order to continue with some of your investments, filing belated tax return you needed to adhere to the financial year ending timeline, there are certain tasks that need to be attented to at the beginning of the fiscal year. Here we list out all such financial tasks:
1. Submitting form 15G/15H:
In case your income is below the taxable limit and you are not required to pay any taxes then to avoid deduction of TDS by your banker (banks deduct TDS before paying out interest on deposits), you need to submit form 15G or form 15H as applicable. These forms are required to be deposited with the financial institution at the start of the financial year.
2. Taxation regime needs to be decided:
There are now two tax regimes available for a taxpayer to choose from. The latest that taxes taxpayers at a lower slab rate but at the cost of around 70 deductions that he or she cannot avail of. This if done at the start of the year will enable better tax planning. Nonetheless, those who have been more deductions as well as exemption under the Income Tax Act will be better off sticking with the old regime.
3. Plan your taxes now:
You can start with your tax planning exercise right away as many times last-minute efforts do not serve the long term financial goals of the concerned taxpayer. The investment opted for availing deduction or the various exemption might not be in line with investor's risk-profile or may even carry a longer lock-in period.
4. Take on a proactive approach to file return for FY 20-21:
For any of the financial year, the due date in a usual scenario for most salaried taxpayers is July 31. So, for now you can begin collecting all documents that are required to file the ITR such as investment statements, bank statements, house loan principal repayment certificate, form 26AS to avoid last minute rush.
5. Investment in PPF:
If you contribute towards Public provident fund (PPF) at the start of the fiscal year, you can earn interest income for the entire year. This is in contrast to the situation where an investor for tax planning purpose invests in the government backed instrument towards the end of the fiscal year and in such a situation you lose on the interest component. And interestingly if you invest in PPF month on month then it is best to contribute by the 5th of every month as the interest calculation is done on the balance on that day of the month.