As the financial year comes to a close, it's crucial to tie up loose ends and ensure your finances are in order.
Whether you're a business owner or an individual taxpayer, taking care of certain tasks before March 31 can help you avoid last-minute stress and potential penalties.
Here are seven essential things you should do before the end of the financial year:
Advance Tax: If you're liable to pay advance tax and missed the due date on 15th March, make sure you've paid the required installments before March 31 to avoid huge interest charges. Advance tax is paid in installments throughout the year based on estimated income, and the final installment is due before the end of the financial year. You can also use our Free Advance Tax Calculator to calculate your advance tax liability.
Review of AIS/Form 26AS: Review your Annual Information Statement (AIS) or Form 26AS to ensure that all your income, taxes deducted, and deposited are correctly reflected. This document provides a comprehensive view of your tax-related information and helps in filing accurate returns. However, please note that you will only be able to view these details for up to December 2023 right now.
Investment for Deduction: Maximize your tax savings by investing in eligible instruments such as Equity Linked Saving Schemes (ELSS), Public Provident Fund (PPF), or National Pension System (NPS) before March 31. These investments not only help you save tax but also secure your financial future. You can learn more about tax saving investments here.
Reconciliation of Outward Liability: For businesses registered under the Goods and Services Tax (GST), it's essential to reconcile outward liability with sales invoices to ensure accuracy in tax reporting. Any discrepancies should be rectified before the financial year ends to avoid penalties.
Reconciliation of Input Tax Credit: Similarly, reconcile your Input Tax Credit (ITC) with purchase invoices to verify that the credit claimed matches the taxes paid on purchases. Rectify any mismatches or discrepancies to maintain compliance with GST regulations.
Payment of Reverse Charge Mechanism (RCM): If you're liable to pay taxes under the Reverse Charge Mechanism (RCM), ensure timely payment of such taxes before March 31. RCM applies to specified goods and services where the recipient is liable to pay tax instead of the supplier.
Review of Composition Scheme, QRMP Scheme, & E-Invoicing: If you're opting for the Composition Scheme, Quarterly Return Monthly Payment (QRMP) Scheme, or E-Invoicing, review your compliance status and make necessary adjustments before the financial year ends. Ensure that you're following the prescribed guidelines to avoid penalties.
As the financial year draws to a close, taking care of these seven tasks can help you stay organized, compliant, and tax-efficient. By addressing these responsibilities before March 31, you can avoid last-minute hassles and ensure a smooth transition into the new financial year.
Remember, proper financial planning and timely action are key to achieving your financial goals and staying on the right side of the law.
You can also connect with a tax expert here to deal with your personal tax situation.