Year End Tax Tips

 The financial year is at its end and its time to check few things in your books of accounts to ensure that you are tax compliant and save some money on taxes. This article aims at giving you some tips that could save your money/ taxes.

Haven’t paid your Advance Tax ?

            If you are one among the many who have missed the Advance Tax payment schedules during Sep-March, don’t worry you can save some money you will be paying as Interest on non payment of taxes (Interest under Section 234B). If you pay your advance tax in full before 31st March 2014, you can save some money payable as Interest for non payment of Advance tax.

            Lets check this with an example. Your estimated tax liability for the year is 25000 and you have not paid any of the advance tax instalments, you can pay 90% of the estimated tax (ie.,) 22500/- by 31st of march 2014, you need not pay interest under section 234B. The comparison is shown below

                                                                        Situation 1                              Situation 2


Pay 22500 before                    Does not pay

31st March 2014                      any tax before

31st March


Total Tax(Incl. Cess @ 3%)                            25000                                      25000

Less :- Advance Tax                                       22500                                      nil

2500                                           25000

Add :- Interest u/s. 234 B

(Assuming you file your returns

on 31st July)                                                     Nil                                           1000


You Save Rs.1000/- in the above example if you pay your advance tax on or before 31st of March 2014. Even if you are not able to pay the advance tax in full, you can still pay the amount as convenient to you and save the interest payment under section 234B which will be 1% per month from April till date of filing the returns.

Haven’t submitted your Investment proofs to your employer ?

If you haven’t submitted your investment proofs to your employer (or) your employer has not considered the proofs in full , submitted by you and deducted tax at source, still you can get back the amount of TDS deduction from your salary. For this you need to have the proofs of tax saving investments ready at the time of investment and while filing your return of Income, you can claim the respective deductions from total income and claim the refund from Income-tax department, if any.

Still not made Tax saving Investments ? 

Making the full use of the available investment options will minimize your tax liability. Did you make use of the Investments eligible for deduction from total income, in full? The commonly used tax saving investment sections are Section 80 C & 80 D of the Income-tax Act.

If you are running out of time and still have some gap in the maximum investment to be made (Rs. 1 Lakh) , and if you are afraid/ not clear of the various investment options available to you, an easy, less time consuming investment is “Tax Saving Fixed Deposit” offered by banks. Tax saving deposits are offered by Banks and will take lesser time for making the investment and with minimum documentation. It will have a lock in period of 5 years and with nominal interest payments. Some banks offer  investment in these type of deposits through the netbanking facility also. If time is your constraint, this is the best type of investment you can choose.

Other than 80 C, another frequently used tax saving option is Mediclaim payments wherein you can pay health insurance premium for your family and claim the same as deduction from your total income. In case the policy is taken on a Senior citizen, you can claim additional 5000/- as deduction under this section.

Advance few payments to claim maximum benefit

If you have a house property income and your municipal tax falls due in the coming months, (say April), you can pay the same now itself and claim the same from your income as these payments are allowed on payment basis irrespective of the year it relates.

If you have a Premium due in the coming month (Say April), make the payment of the same before 31st march and you can claim the same from your total income as these payments are also allowed as deduction on payment basis.

Do you have any other income for which you have not paid the advance tax ?

If you have any other income (say Rental, Interest, etc.,) which is also a substantial amount and you have failed to pay your advance tax for the same, you can still save money that will be levied as interest for non payment of advance tax.

A simple solution is to declare the same to your employer as “Other income” and request him to deduct tax on the same during TDS deduction to be made for the month of March. As the tax on other income will be taken care by these TDS, you will save a lot of Interest (234 B & 234 C) payments.

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