The year-end for tax purposes is round the corner. Heres a checklist of things you need to do regarding your personal tax matters,and the right way of doing them.
1 Submit proofs related to your 80C investments. You might have made investments under Section 80C to avail of tax deduction up to Rs 1 lakh. You need to share proof of these investments with your employer so that they can adjust this in the amount of tax they deduct from your salary.
2 Submit proofs related to HRA and LTA. If you intend to claim HRA (House Rent Allowance) and LTA (Leave Travel Allowance) deductions,ensure that the relevant rent and travel receipts have been submitted to your employer. According to a recent Supreme Court judgment,employers are no longer under the statutory obligation to collect travel bills. However,to be on the safer side most employers are still following the traditional method for allowing LTA exemption.
3 Submit bills related to reimbursements. If your company offers you reimbursements for conveyance,travelling,telephone,medical bills,etc.,ensure that all the bills have been submitted to your employer on time. Otherwise,your employer will have no option but to tax them. Further,ensure that all the reimbursements are backed by adequate cash withdrawals from your salary account. Otherwise,you might not be able to justify the expenditure before the tax authorities. You might even risk facing an inquiry.
4 Submit relevant home loan repayment documents to your employer. If you have any home loan outstanding,then you must ensure that you collect the relevant principal and interest repayment certificate from the lender and submit this to your employer so that the appropriate tax treatment can be given. Please bear in mind that under Section 80C you can claim up to Rs 1 lakh tax deduction towards repayment of your home loan principal. If you use this total amount towards your home loan,then you cannot use this deduction towards any other instrument in the current tax year.
5 Submit TDS certificate from previous employer,if applicable. If you have changed employment during the financial year,then collect the TDS certificate (Form 16) from the previous employer and submit it to your current employer to ensure the correct tax deduction. This small exercise can save you huge interest on your taxes at the time of filing your returns later.
6 Submit Form 16A for rental or interest income if applicable. If you receive rental income or interest income from fixed deposits or bonds then you must also collect the TDS certificate (Form 16A) from the deductor,if any tax has been deducted during the year.
7 Compute capital gains/losses on your transactions. If you have sold or transferred any capital asset like a house,shares,mutual funds,etc.,then compute capital gains/losses on these transactions. Also review whether your holding period for this asset will classify these as long term or short term,and whether any exemptions are available. If you have capital losses,you might be able to set off short-term losses against both short-term and long-term gains. In case of long-term losses,you can set these off only against long-term gains. You might also be able to roll over your capital losses up to eight years,if you cant use them in the current year.
8 Utilise your full 80C deduction. If you have not fully exhausted your Section 80C limit of Rs 1 lakh deductions for tax saving investments,ensure that you do so before March 31. Often people leave money on the table and dont take full advantage because they have either invested just in PPF where the annual limit under Section 80C is Rs 70,000 or they dont realise that they had some more tax deduction to exhaust under Section 80C.
9 Check if your donee trust is registered under 80G. If you intend to make a donation,check that the donee trust/institution is registered under Section 80G so as to enable you to claim a tax deduction for the donation you make. If you have already made a donation,arrange for a donation receipt from the recipient.
10 Clear any existing tax liability. While assessing income from various sources,if there is any tax liability yet to be paid (of course after taking into account tax already deducted and deductions to be claimed) then this should be paid as soon as possible. Due date for final installment of advance tax is March 15.
EVERGREEN TAX TIPS
• Submit relevant paperwork to your employer
• Keep track of all your financial transactions
• Hold on to documents in case you need them later on
• Meet the tax deadlines in order to avoid fines
• Keep your employer informed for appropriate treatment for deduction
The authors are co-founders of Delhi-based iTrust Financial Advisors