There are just a couple of weeks left for the current financial year to come a close, which means that it will be the end of yet another tax-saving season. If you still have not completed the necessary tax-related tasks, now is the time to do it instead of leaving it till the very last minute.
Although you have 2-week time till March 31 to get done with these tasks, it is advisable to keep a buffer of at least 10 days.
Here are 5 tasks you should complete before March 31:
TDS on rent payments
If you are paying monthly rent of Rs 50,000 or more, then you must deduct tax on the total rent paid in a year (April to March) at a rate of 5 per cent. The deducted tax should also be deposited with the government before March 31, 2018.
Chetan Chandak, Head of Tax Research, H&R Block India says, “As per tax laws, it is the duty of the tenant to deduct the tax on the total rent paid. TDS on rent will be deducted only once in a financial year, either at the end of last month of the fiscal or in the last month of tenancy, whichever is earlier. The TDS deducted should be deposited with the government within 30 days from the end of the month in which the deduction was made. Failure to do so will attract penalty and interest.”
Let us say if you have taken a house on rent in August 2017 for monthly rent of Rs 55,000 per month. The total rent paid by you till March 2018 is 4.4 lakh (Rs 55,000 X 8 months). You will be required to deduct TDS at the rate of 5 per cent on Rs 4.4 lakh (which is equivalent to Rs 22,000) from the March’s month rent and deposit the same within 30 days.
Interest will be levied at a rate of 1 percent on the amount of TDS for every month or part of the month, from the date on which it was supposed to be deducted to the date on which it is deducted. Additionally, if you do not deposit the tax deducted with the government within 30 days, then interest will be levied at a rate of 1.5 per cent on the TDS amount, for every month or part of the month from the date tax was deducted to the date on which it was deposited. A penalty can also be levied at Rs 200 per day, and this can go up to a maximum of the amount equal to the tax that has to be deposited, can also be levied for failure to file the TDS return in time, adds Chandak.
The income tax Act offers certain tax benefits that an individual can make use of to reduce his tax outgo. Section 80C offers a maximum tax-saving of Rs 1.5 lakh which can help you save tax up to Rs 45,000 depending on the slab your income falls in. There are certain investments and expenditures that offers tax-saving benefits under this section.
Another thing to keep in mind is that even if you are not investing in PPF or NPS for saving tax, ensure that you have made at least a minimum contribution to keep these account/s active. If the investment account becomes inactive, then to reactivate them you will have to pay a penalty along with the minimum contribution missed for that particular year.
Also, don’t forget to provide the documentary evidence of your tax-saving investments and expenses to your employer before the due date. If you do not do this on time, the employer will deduct excess TDS in the absence of the investment proof. Click here to know everything related to tax-saving.
If you have changed jobs during the FY
If you have switched your job during the financial year 2017-18, then you must provide the details of income, tax deducted to your current employer using Form 12B. Your current employer will be able to deduct the correct amount of TDS only once you submit the details of TDS cut from your previous salary. Therefore, this submission should also be done well before March 31.
Belated filing of Income Tax Returns
For those who have not filed their income tax returns (ITR) for the financial years 2015-2016 and 2016-17, the last date to file the same is March 31, 2018. Post this deadline, you won’t be allowed to file the ITR unless the department has sent you a notice.
Chandak says, “March 31, 2018 is the due date to file belated ITR for the last two financial years Earlier taxpayers were allowed to file belated tax returns up to two years after the end of relevant FY, but starting from FY 16-17 belated returns can be filed only till the end of the relevant AY (FY 17-18) in this case which means by March 31, 2018.”
The ‘relevant’ Assessment Year (AY) for filing ITR the immediately succeeding FY. For instance, The AY for filing ITR for FY 2015-16 is 2016-17.
If any tax is due, interest will have to paid under section 234A of the Income-tax Act, 1961 at a rate of 1 per cent per month or part of thereof. Moreover, the assessing officer can levy a penalty of Rs 5,000 for late filing of ITR, says Chandak.
Revision of ITR
An individual has an option to revise the ITR filed to rectify any mistakes made. However, there is a time period by when the revision has to be made. As per section 139(5) of the Act, a person can file his revised return at any time before the expiry of one year from the end of relevant assessment year or before the completion of the assessment, whichever is earlier.
Therefore, for those who wish to revise their ITR for the financial year ending on March 31, 2016 the last date is March 31, 2018. Those filing belated returns for the financial year ending on March 31, 2017, will have time till March 31, 2019.
Chandak says, “One can use this opportunity to revise his/her returns to report the correct income details or else the department may levy penalty of 50 per cent of tax payable in cases where the income is under-reported.”
(With inputs from Sunil Dhawan and Preeti Motiani)