- Date : 10/03/2023
- Read: 4 mins
Make sure you complete these four important tax planning tasks before April 1: linking PAN with Aadhaar, filing updated ITR, reviewing tax-saving status, and preparing for changes in insurance policies.
With April 1 fast approaching, it's essential to make sure you have completed all the necessary tax planning tasks to ensure your taxes are filed accurately and on time. While every individual's tax situation is unique, there are some key steps that everyone should take before the tax filing deadline.
In this blog post, we will outline the four most important tax planning tasks that should be completed before April 1 so that you can rest easy knowing your taxes are in order. Read on to find out more about how to get started on your tax planning journey.
Getting started on your tax planning journey
With the April 1 deadline for filing income tax returns fast approaching, it's important to make sure that you are well prepared.
1. Link your PAN with your Aadhaar
The first and most important tax-related task is linking your Permanent Account Number (PAN) to your Aadhaar card. The Income Tax Department has announced March 31, 2023, as the last date to link PAN and Aadhaar.
If you haven't done so already, it's essential to do this before then. Although the deadline was extended from June 30, 2022, to March 31, 2023, those who link after June 30, 2022, will face a penalty of Rs 1000. So make sure to link your PAN and Aadhaar soon. Failure to do so by the final deadline will result in your PAN becoming inoperative.
2. File your updated ITR
The last date to file an updated ITR for AY21 is March 31, 2023. ITR-U can be filed if mistakes or missed income details are present in the original ITR, revised return, or belated return. If an updated ITR has already been filed, it cannot be filed again.
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Tax planning is the process of managing finances to maximize tax efficiency and minimize tax liability. It involves evaluating tax options and taking advantage of tax benefits, credits, and deductions offered by the government. With an updated ITR, you can maximize your returns and reduce your tax liability.
3. Review your tax saving status
As the end of the financial year approaches, it is essential to review your tax-saving status. March 31 is the cut-off date for taking tax-saving initiatives, so it is important to be aware of your options.
Under Section 80C, your PPF, ULIP, ELSS, and other investments are tax-deductible up to a limit of Rs 1.5 lakh. Your health policy premiums can help reduce your taxes, too, covered under section 80D.
Additionally, interest on an education loan can be claimed as a deduction under Section 80E. Therefore, it is important to make interest payments on an education loan before March 31 to get the deduction benefit.
4. Insurance with a premium over Rs 5 lakh
From April 1, 2023, onwards, any proceeds from insurance with a total annual premium of more than Rs 5 lakh in a financial year will become taxable. So if you have an insurance policy with a premium of more than Rs 5 lakh in the current financial year and you are looking to save tax on its maturity proceeds, it is better to make a move before the financial year ends.
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Remember that insurance is a risk mitigation tool, so buying it should be done with your financial goals in mind. Investing in insurance must be done responsibly and keeping all the aspects of personal finance in check. So, before the financial year comes to an end, make sure to clean up any outstanding financial obligations, such as paying credit card bills and EMIs, and arranging all necessary financial documents.
It is also important to avoid leaving financial decisions on the last day of the financial year, as this often leads to mistakes. Plan ahead and take wise decisions based on your goals and resources to ensure that you can take advantage of all available tax benefits.