There is less than a fortnight left for the financial year to end. Taxpayers will have to finalize their tax return within this time and then get ready to file the same. The following is a checklist that can serve as a handy last minute reference.
1. The most important thing to do is to compile a list of the TDS you have paid. Such TDS operates like tax already paid i.e. from your final tax liability, you have to pay only such amount that is over and above the tax already deducted.
2. If you have availed of housing finance, be sure to collect the certificate of your EMIs and the total interest paid from the housing finance company.
3. If you haven't bought Mediclaim, do so now. Not only is medical insurance a necessity, there is a deduction of Rs. 15,000 (Rs. 20,000 if you are a senior citizen) on the premium paid available under Sec. 80D. If you buy medical insurance for yourself and for your parents who are 65 or above, the total deduction that can be claimed is Rs. 35,000.
4. Though a small minority, there would still be those who haven't done their Sec. 80C investments. For this purpose, first take into account mandatory payments like provident fund, housing loan EMIs and tuition fees if applicable. Reduce the total amount spent from the Rs. 1 lakh limit. Distribute the balance in a combination of ELSS and PPF. If you are relatively young and just starting out, put 70% into ELSS and 30% into PPF. As you advance, lower the ELSS and increase the PPF eventually reaching a 30% ELSS and 70% PPF combination.
5. Sec. 88 used to be unavailable to those earning above Rs. 5 lakh. Howev er, not so Sec. 80C that has replaced Sec. 88. Everyone, regardless of income level, can take advantage of the Rs. 1 lakh tax break offered by 80C.
6. If you have made a donation, you will need the receipt issued by the donee institute to get the benefit of the deduction under Sec. 80G. If you have not collected such a receipt, do so soon.
7. Remember, business loss cannot be set-off against salary income. Simi- larly any capital losses cannot be set- off against any other type of income. Short-term capital loss can be set-off only against short-term capital gain or taxable longterm capital gain.
8. Since long-term capital gain from sale of shares and equity MFs is tax-free, any long-term capital loss from the same cannot be set-off at all.
9. Most losses (other than long-term capital loss mentioned in point 8 above) can be carried forward for setoff for as long as 8 years.
However, for this you need to file your tax return by the due date. For individuals, this date generally is by the 31st of July of the assessment year. If a return is not filed by this date, then carry forward of losses is not allowed.
10. Long-term capital gain earned on sale of residential property may be saved by investing the capital gain amount in another property.
However, to save tax on long-term capital gain from sale of any asset other than residential property (say commercial property), the entire sale proceeds need to be invested in new property and not just the capital gain. If a lesser amount is invested, the deduction will be proportional.
11. If you are a female assessee under the age of 65, do not forget to take into account the special tax exemption slab of Rs 1,80,000 while arriving at your tax. And if you are above the age of 65, remember to claim the special slab exemption of Rs. 2,25,000.
12. The last date for payment of advance tax was March 15th. However, if your advance tax payable is less than Rs. 5,000, then you can pay such tax while filing the return. Also, if you earn any income after 15th of March, pay tax on it on or before 31st and such tax would also be treated as advance tax.
Last but not the least, get in order all your supporting documents of the tax planning/saving instruments that you have invested in. For employees, this directly affects the amount of TDS on your salary. If you are late, you would end up bearing a higher amount of TDS than what ought to have been deducted.
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