Income Tax Planning for FY18-19: Top 11 tasks you need to complete this year

The Financial Year 2018-19 has just begun. It is high time to set new financial goals keeping in mind the lessons learnt from the mistakes you made in the previous FY. Planning your finances at the beginning of the year can help you achieve your financial goals successfully. You, however, need to remember that there are a number of things you are required to do throughout the year consistently to achieve your goals, be tax compliant and save taxes. We are taking a look at the important ones. Here they go:

1. Quarterly Advance Tax payment
Generally, most of the salaried taxpayers do not worry about paying taxes because their employers deduct taxes from their salary and pay to the government. However, if you have any additional source of income, your employer will not generally deduct tax for it unless you have declared that income to the employer for tax calculations. For example, if you are earning interest through your bank FD or earning money from rented property, then you need to calculate your tax liability and pay advance taxe. Similarly, if you are a businessman or a self-employed individual, you have to pay advance tax if your estimated income will exceed the exemption limit.

The due dates for paying advance tax for the FY 2018-19 are as follows:

2. Filing Form 26QC
If you live in a rented accommodation and your monthly rent payment exceeds Rs 50,000, then you need to pay tax (TDS) on behalf of your landlord. You need to deduct 5% of the annual rent payment as tax and submit it to the government. This activity needs to be done only once a year at the end of the financial year or on termination of tenancy. You can make the payment of TDS to the government by filing Form 26QC.

3. Filing Form 26QB
If you are planning to purchase a property during this financial year, then you may have to deduct and pay TDS on behalf of the seller. If the sale consideration of the property exceeds Rs 50 lakh, the buyer has to deduct tax @ 1% at the time of making the payment and deposit it to the government’s account by filing Form 26QB. However, if the seller is an NRI, then the purchaser has to deduct TDS irrespective of the sale consideration of the property and the TDS will have to be deducted u/s 195. In this case, you will also have to apply for TAN.

4. Filing Income Tax Return
Soon you will receive your Form 16 which you can use for filing returns for FY2017-18. The general due date for filing Income tax return is 31st of July every year. Remember to file your taxes before the expiry of the due date to avoid paying late filing penalty of Rs 5,000. If you do not file your return by December 31, 2018, the penalty will be Rs 10,000. However, if your income was below Rs 5 lakh in the FY 2017-18, then the penalty will be Rs 1,000.

5. Investment declaration in Form 12BB
This is one activity which you may have to do very soon if you are a salaried person. Your employer will shortly ask you to declare your investment plans as per which he will adjust your TDS throughout the year. You can make your investment declaration by filing Form 12BB.

6. Making regular tax-saving investments throughout the year
Making investment declaration is one thing but making investments regularly throughout the year is a challenging task if not planned well. It’s better to make tax-saving investments in parts so that you do not fall short of your target in the end. Not only it is difficult to make a big investment at the end of the year, but it is also financially disastrous if you fail to do so because your employer will deduct the high amount of taxes from your income in the end.

7. Review your health and life insurance cover
In today’s world, it is very important for you to have a good health insurance cover which guards you against sudden and sky rising medical expenses. At the same time when you invest money in a life insurance policy, remember to invest in a term insurance plan rather than ULIP / endowment plans as it has potential to provide better security to your loved ones in case of any eventuality.

8. Use bonus wisely
If your employer gives you an annual bonus, you can get tempted to spend it lavishly. However, it can really prove to be a lifesaver if you are lagging behind in achieving your financial goals. It can help you in making a big tax saving investment in one go.

9. File Form 15G / 15H
If you are a retired person, you may consider filing form 15G/15H. If you think that your income for the current FY will not exceed the basic tax exemption limit, then you can file these forms to avoid TDS. By filing these forms, you can ask banks not to deduct TDS on your interest income.

10. Review your investment portfolio
In the new financial year, you should review your investment portfolio. You may sell a few stocks which have been underperforming for a long time. In their place, you can invest in some other promising stocks to balance the risk and return ratio.

11. Review progress of your financial goals
Keeping track of your advancement is an important step in achieving your goals. Make sure that you review the progress of your financial objectives on a regular basis so that you don’t fall behind.