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Income Tax Planning & Important things to do by every individual before end of March -22

Income Tax Planning & Important things to do by every individual before end of March -22

Last month to invest and save taxes

The existing financial year 2021-22 is about to end on March 31. This is the last chance to maximise tax benefits under various sections mentioned below the table. Despite being aware of this deadline, most of the investors postpone their income tax planning to the last minute. If you have not planned your tax-saving investments till now, then do it at the earliest and avoid common investment mistakes. To save your tax, do not buy unnecessary life insurance policies and borrow to invest for saving on taxes. Tax planning is a part of financial planning. Align your tax-saver investments with your goals and overall strategy.

SectionsIncome Tax Deduction for FY 2020-21 (AY 2021-22)Who can Invest?Limit for FY 2020-21 (AY 2021-22)
Section 80CInvesting into very common and popular investment options like LIC, PPF, Sukanya Samriddhi Account, Mutual Funds, FD, etcIndividual
Upto Rs 1,50,000
Section 80CCCInvestment in Pension FundsIndividuals
Section 80CCD (1)Atal Pension Yojana and National Pension Scheme ContributionIndividuals
Section 80CCD(1B)Atal Pension Yojana and National Pension SchemeContribution Tier-1IndividualsUpto Rs 50,000
Section 80CCD(2)National Pension SchemeContribution by EmployerIndividualsAmount Contributed
14% of Basic Salary + Dearness Allowance (in case the employer is CG)
10% of Basic Salary+ Dearness Allowance(in case of any other employer)
– Whichever is lower
Section 80DMedical Insurance Premium and Medical ExpenditureIndividual
Up to Rs 1,00,000
Section 80DDMedical Treatment of a Dependent with DisabilityIndividual
Normal Disability: Rs 75000/-
Severe Disability: Rs 125000/-
Section 80DDBSpecified DiseasesIndividual
Senior Citizens: Upto Rs 1,00,000
Others: Upto Rs 40,000
Section 80EInterest paid on Loan taken for Higher EducationIndividual100% of the interest paid up to 8 assessment years
Section 80EEInterest paid on Housing LoanIndividualUp to Rs 50,000 subject to some conditions
Section 80EEAInterest paid on Housing LoanIndividualUpto Rs 1,50,000/- subject to some conditions
Section 80EEBInterest paid on Electric Vehicle LoanIndividualUpto Rs 1,50,000 subject to some conditions
Section 80GDonation to Charitable InstitutionsAll Assessee (Individual, HUF, Company etc)100% or 50% of the Donated amount or Qualifying limit,
Allowed donation in cash upto Rs.2000/-
Section 80GGIncome Tax Deduction for House Rent PaidIndividualRs.60,000/-
25% of Total Income
Rent paid – 10% of Total Income
– whichever is lower
Section 80GGADonation to Scientific Research & Rural DevelopmentAll assessees except those who have an income (or loss) from a business and/or a profession100% of the amount donated.
Allowed donation in cash upto Rs.10,000/-
Section 80GGBContribution to Political PartiesCompanies100% of the amount contributed
No deduction is available for contributions made in cash
Section 80GGCIndividuals on contribution to Political PartiesIndividual
100% of the amount contributed.
No deduction is available for contributions made in cash

KYC Update in your Bank Accounts

Customers are required to complete updating KYC by March 31, 2022. The Reserve Bank of India (RBI) had extended the deadline for KYC in bank accounts till March 31, 2022, from the previous deadline of December 31, 2021. The deadline has been extended again due to the surge in the Omnicron variant of the coronavirus in the country.

Customers need to visit their bank branch along with a set of self-attested documents, which include proof of identity and proof of address. The RBI has now allowed the use of digital channels for periodic updation of KYC details of customers. This includes video-KYC and submission of electronic documents through digi-locker to the financial institutions for verification purpose

Last Date for Filing Belated Returns / Revised Return:

The deadline for filing the income tax return (ITR) for the Financial Year (FY) 2020-21 or Assessment Year (AY) 2021-21 ended on December 31, 2021. But you can still file a belated return till March 31, 2022. However, to file a belated return, you may have to pay a penalty and additional interest on taxes. Besides, there are a few limitations of a belated return. Read more to understand.

A belated return is a return which is filed after the stipulated due date mentioned in the income tax rules. A belated income tax return attracts a late filing fee under Section 234F of the Income Tax (I-T) Act of Rs 1,000 in case the Gross Total taxable income during the financial year does not exceed Rs 5 lakh; or Rs 5,000 otherwise.

If you noted any mistake or discrepancy in your filled return now then you have the opportunity to file Revised return up to March 31, 2022.

Advance Tax Installment

The deadline for filing advance tax is approaching. Any person whose estimated tax liability for the year is Rs 10,000 or more is required to pay advance tax. The advance tax has to be paid in four installments in the financial year itself. The last date for paying the fourth installment of advance tax is March 15, 2022.

This applies to all taxpayers, salaried, freelancers, and businesses. However, a resident senior citizen (an individual of age 60 years or above), not having income from business or profession is not liable to pay advance tax. A salaried person, who doesn’t have any income other than salary, needs not to pay advance tax installments, as employers are required to deduct the applicable tax from monthly salary and pay to the department. Failure to pay correct advance tax on time or short payment of tax attracts penal interest.

PAN-Aadhar Linking

The last date to link your Permanent Account Number (PAN) with their Aadhaar card by March 31, 2022. If not done by the given deadline, the PAN card can become invalid and a fee of Rs 1,000 may be required for linking the PAN card with Aadhaar thereafter. If the PAN card is not linked to Aadhaar, an individual will also not be able to invest in mutual funds, stocks or open a bank account among other things as furnishing a PAN card in all those cases is a must.

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