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With March 31 round the corner, you would have done your tax-saving investments to claim deduction under popular sections of the Income Tax (IT) Act - 80C (deductions up to ₹1.5 lakh for specified investments and expenses), 80D (deduction for medical insurance), 80G & 80GGC (deductions on donations to charitable trusts and political parties).
Apart from the above, there are few other payments which are usually ignored but which, if taken note of before March 31, will optimise your taxes and save you from unnecessary burden of interest and penalties.
Advance tax
Tax payers have to pay advance tax if their net tax liability (excluding TDS) for a financial year is expected to be ₹10,000 or more.
The advance tax has to be paid in phases in four instalments during the financial year.
Not less than 15 per cent of the advance tax must be paid on or before June 15; not less than 45 per cent (reduced by earlier instalment) by September 15; not less than 75 per cent (reduced by earlier instalments) by December 15, and the whole amount of advance tax (reduced by earlier instalments) by March 15 of the financial year to which your income relates to.
Missing any of the deadlines and failing to pay taxes as stated above will attract interest under Section 234C.
As per the Section, interest is charged on the shortfall amount from the applicable due date till the end of the financial year for which the taxes pertain to.
In addition to 234C, interest under Section 234B is also payable if the total advance tax paid (including TDS) is less than 90 per cent of the tax liability before March 31 (end of financial year).
This interest is charged on the shortfall amount from April 1 of the assessment year (April 1, 2019 in case of FY 18-19) till the date of payment.
Therefore, if you are a tax payer who missed paying the whole or part of the advance tax liability for FY 18-19 (AY 19-20) by March 15, 2019, paying the shortfall taxes before March 31, 2019 will save you from interest under Section 234B.
Pay your municipal tax
If you rent out a house property owned by you, the annual rental income is liable to tax under ‘income from house property’ as per Section 24 of the IT Act which allows deduction of municipal taxes paid.
One of the conditions to be satisfied to get the benefit of deduction is, municipal taxes must be paid during the financial year that is, before March 31.
Municipal taxes due but not paid cannot be claimed as deduction.
Therefore, if you are an owner of a house property and received a notice of municipal tax due on, say, April 15, 2019, you will be allowed to claim deduction of the municipal tax for FY 2018-19 (AY 19-20) only if it is paid before March 31, 2019.
If you pay after March 31 and before April 15, 2019, deduction can be claimed only in the next financial year, FY 19-20 (AY 20-21).
File your old returns
Filing income tax returns is important to adjust your previous year losses against future incomes (which thus reduces the tax liability) and to claim income tax refund (if tax paid or TDS is deducted more than the tax liability). Other benefits of filing IT returns include faster acceptance of your loan applications.
If you miss filing your tax return for any financial year within the due date (usually July 31 following the financial year concerned), the I-T department allows you to furnish a belated return under Section 139 (4) any time before the end of the relevant assessment year (if the assessment is not done by then).
Hence, if you missed filing the income-tax return for FY 17-18 before the extended due date of August 31, 2018, you have the option of filing the belated return on or before March 31, 2019. Note that, in case of belated returns, only losses under the head- house property can be carried forward. The losses under the head ‘profits and gains of business or profession’ or ‘capital gains’ will become eligible for carry forwrad only if the IT returns are filed within the original due date.
Also, if you have already filed your return for FY 17-18, but found an error or wrong statement, you can revise it before March 31, 2019.
However, if you miss filing your tax returns within the original due date, you will be charged a penalty of up to ₹10,000.
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