The End of Fiscal Year 2022-23 is Almost Here. Are You Prepared?

The New Year's revelry is behind us, but the end of the financial year 2022-23 is not. With 31st March approaching, completing your key financial tasks by this date is advisable, and if you miss the deadline, you can be penalised.

To simplify things for you, here's a checklist of the financial tasks that need your attention:

· Review your financial portfolio

· Link PAN with Aadhaar

· File pending IT Returns, including corrections in previous returns

· Get life and health insurance covers

· Claim allowances, and finally

· Invest prudently, and collate documents

Let us look at each of these in detail.

· Financial portfolio review
 

First, this assumes you have financial goals and an investment plan – with a mix of equity and debt allocations – already in place to reach those targets.

The review ensures that this plan (i.e. your investments) is aligned with your goals and in sync with your investment horizon, financial state, and risk tolerance. There are possibilities there is a change in goal post and also there are new opportunities in the market which will help achieve your goal. There is also a possibility some investment may not be relevant or not suitable to you due to external factors.  A review of your current portfolio will help you perfect your investment decisions.

· Linking PAN with Aadhaar
 

Under the law, anyone who intends to enter into a financial transaction (where quoting the Permanent Account Number (PAN) is mandatory) must obtain a PAN. This means one needs a PAN to open a bank account or buy shares, mutual funds, etc. Indian law also requires you to link your Aadhaar number with your PAN. If this is still pending, you have time till 31st March 2023.

If you miss this deadline, your PAN card will become invalid, and you will be blocked from executing financial transactions requiring a PAN number. You might also be penalised Rs 10,000 under section 272B of the Income Tax Act, 1961. The same penalty stands for possessing duplicate PAN cards.

You can link your PAN to your Aadhaar card here.

· Pending IT Returns

Taxpayers are provided a two-year period during which past income tax returns can be filed. If you want to file returns for the past two years, you can go as far back as 2021-22, provided you file by 31st March 2023. 

By being up to date with your tax returns, you benefit in many ways. Here's how:

· It will be proof of steady earnings for the past two years, as income tax returns serve as proof of income. This means you will find it easier to get loan applications processed as lenders (banks and financial institutions) will see you as solvent

· Getting a visa will become easier, as tax returns are mandatory if one applies for a visa

Conversely, there can be unpleasant consequences of not having past filings in order, such as the following: 

· First of all, you will incur a penalty of Rs 5000

· Second, this lapse will be construed as concealment or non-disclosure of income for the past two years, leaving you open to prosecution

· Third, you have to pay interest on your outstanding tax amount when filing the return in future

· Lastly, refunds (if any) will be delayed

· Life and Health Insurance Covers

One good way to get tax deductions for your income during FY 2022-23 is to get life and health insurance coverage. You can claim a deduction on your life insurance premium paid during the year under Section 80C and Section 10(10D) of the Income Tax Act. The deduction is available in respect of policy taken in your name, that of your spouse, and your children.

The overall deduction allowed under Section 80C (along with deduction under Section 80CCC & 80CCD) is up to Rs 1.5 lakh. 

IDFC FIRST Bank offers comprehensive coverage and optional whole life covers up to 99 years. To explore further, click here.

You are offered similar relief on the premium amount on health insurance under Section 80D of the Income Tax Act.

After careful planning with IDFC FIRST Bank health covers, you can save up to Rs 25,000 in a financial year for yourself, your family, and dependents below the age of 60 on the premium paid. Moreover, if any of you are over 60, this benefit increases to Rs 50,000.

Health insurance purchased through IDFC FIRST Bank can also be used for tax deductions under Section 80D. All you have to do is download IDFC FIRST Bank's mobile banking app, register your details, and buy the insurance you need. Click here to know more.

· Claim your allowances

The Income Tax Act allows a host of tax-free allowances such as travel allowance and house rent allowance. If the terms of your employment give you any of these, you must claim them and benefit.

· Investing Prudently, Collate Documents

Apart from life and health insurance, a few other investment options eligible for tax relief under Section 80C include Public Provident Fund (PPF), Equity-linked Savings Scheme funds (ELSS), National Savings Certificate, the down payment on your housing loan, tax-saving fixed deposits, etc.

You can invest in any of these and keep the documents carefully, as you must submit them for tax relief. Similarly, if you have been planning to take a home loan, seek one before the fiscal end to avail of the tax benefit it offers.

If you have a joint home loan account with IDFC FIRST Bank, you can claim tax write-offs on home loans. Each joint owner can claim deductions up to Rs 2 lakh on the interest and Rs 1.5 lakh on the principal amount paid for the loan. Click here to know more.

In conclusion

Not being up to date on tax filings will open you to financial penalties. Also, not making tax-saving investments as per your tax slabs will take a significant bite off your salary. In short, not taking care of the must-do financial tasks benefits no one, the least of you. 

On the other hand, if you are up-to-date with these little tasks, you can begin the new fiscal in the true Happy New Year spirit. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.