What we need to do as the Financial Year is coming to an end

FY 2018 is almost complete and being the financial year we need to do certain things on or before the financial year as well as also start planning for the next financial year in a much better way so as to avoid the mistakes which might have incurred this year. So what are important things which should be taken care of before this year’s ends and what we need to start at the earliest in the coming year? Let’s understand them more.

1 File tax returns for previous years

Government has withdrawn the facility of filing income tax returns for two financial years. From this year onwards we need to file the tax return in the assessment year itself. Which means 31 March is the deadline for filing returns for 2015-16 and 2016-17. Although we can file tax return till 31 March, but it is always better to file the return by due date i.e.  31 July. Further is there is any losses to be set off we have to file the tax return on time. Otherwise, we can’t carry forward the loss to the next financial year.

2. Review the Investments

We need to review our portfolio on basis  so as to have the idea what is going on, and if required to book losses or capital gains so as to get the benefits on that particular year. The reintroduction of LTCG tax on equities is also another reason the review the portfolio on every year. Review should not only just check the returns but also consider the portfolio allocation on various asset classes and whether it matches with our current financial goals. In equity funds one year performance may not be sufficient to remove any investments but we should find out the reason for its underperformance. As certain value funds may underperform in a bull market however they may do well over a period of time hence it’s not a good idea to sell them just because they did poorly in one year.

3. Keep all the documents in order

As we need to file a return in next four months so we should now keep all the papers ready like documents related to tax exemptions i.e. home loan account statement, Investment made under 80C, Mediclaim, Capital Gain/loss details. We also need to check the TDS deducted by Banks/Companies so as to account them in our tax returns. We should also get our all accounts/passbook updated so as to have clarity what is there or if something is missing.

4. Invest in PPF account before 31^st March

If we have a running PPF account then every year a minimum of Rs. 500 to be invested to keep it running. So if we have forgotten to invest we still have few days to invest so as to avoid the penalty.

5. Start for the Next Year right Now

Most of us do our tax-saving investments only when our HR asks the proofs for the investment in the month of March. However it is always wise to start the investment at the starting of the year itself so as to plan in a more systematic way. Rather than investing Rs. 1.50 lakhs in ELSS in the March it is always better to do SIP of Rs. 12500/- Per month. This helps us to average out the cost of investments and also saves us from market volatility. Before starting any tax saving investments we should first consider all expenses & investments which qualifies for Section 80C tax deductions i.e.—tuition fee of kids, principal component from housing loan EMI, EPF deductions, annual premium on existing insurance policy, etc. After that we should decide the amount still left which can be invested under Section 80C. Then further we can distribute this investments (depending upon an individual’s risk appetite) in equity and debt instruments. For equity investments, starting an SIP in an ELSS fund is the best strategy and for debt PPF could be a good option.

6. Submit documents to avoid TDS

We need to submit 15G and 15H (for Senior Citizens) forms to Banks and Companies where we have invested in Fixed Deposits and interest component is more then Rs.10,000 (Rs.5000 in case of Company FDs), The tax free interest limit for senior citizens has now been raised to Rs. 50,000.  We should submit these forms at the start of the year i.e. April itself so as to avoid any inconvenience later. However please remember this exemption is only for those who do not come under income tax payable limits. If you pay tax then you should not file or else the IT Department can take action against you.

6. Plan for the year in advance

We should also plan for our budget and investment at the start of the year based on previous years’ experience. Like we may plan to buy certain items, planning for the holiday next year or have some other goals in mind. Keeping those things in mind we may be required to invest more or if our investment is concentrated into one type of assets then it needs to be diversified properly. All those things should be reviewed at the start of the year so that we can avoid the mistakes and last minute anxiety.

Planning for everything is very important and when it is about money we need to be extra careful so that it should make our life easy not to increase the tension. By planning at the start of the year and final review before completion of the year will help us more peace of mind and also not to make last moment mistakes.