5 financial tasks to complete in April to set the course for the new financial year

Now the next tax regime is the default tax regime, so you need to decide whether you want to stay in the old tax regime. “Normally the salaried class of people should decide which regime to opt for in the month of April, which is generally the month when the employers open up the window for regime selection and income tax declaration,” says Archit Gupta, founder and CEO, Clear, a fintech company.

In case you decide to opt for the old tax regime it makes sense to start your tax planning early. “Generally, employees need to declare their tax savings to their employers for deduction of taxes. Hence, employees need to plan their investments accordingly to claim tax benefits,” says Suneel Dasari, founder and CEO at EZTax.

Persons who have income from business have the liberty to select the regime at the time of filing of taxes, however that too comes with consequences. “The business people can opt in to the new tax regime only once in their lifetime and get out of it only once in their lifetime as well,” says Gupta.

Leaving tax planning for the end of the financial year can lead to rushed decisions. “Taxpayers should have a broad idea when and where to invest and whether they will be able to take the benefit of tax saving expenses,” says Gupta.

Banks are obligated to deduct TDS under section 194A of the Income Tax Act if your interest income goes beyond ₹40,000 in a year for individuals who are not senior citizens. The limit for senior citizens is ₹50,000. The bank will combine the interest on deposits from all its branches to determine this limit.

If your overall income is below the taxable threshold, you can provide Forms 15G (if you are below 60 years old) and 15H (if you are aged 60 years or above) to the bank and request them to not deduct any TDS. The validity of forms 15G and 15H expires on March 31, so it is important that you submit the forms at the beginning of the financial year.

Before March 31, there was an urgency to link PAN to Aadhaar and also to complete the mutual fund nominations. There was so much traffic on the Income Tax website that it crashed when the deadline came near and people found it difficult to link their Aadhaar and Pan card.

The Aadhaar PAN linking deadline has now been extended to June 30, 2023 and the deadline for mutual fund nomination is now 30 September, 2023. While these deadlines are still some time away, if these tasks are still not complete, one should complete them at the earliest to avoid any last moment rush. “Non-linking of PAN and Aadhaar leads to inoperative of PAN and non-completion of nomination leads to freezing of investments,” says Dasari.

Public Provident Fund (PPF) investments are a good option for the debt portion of your portfolio as it is not only eligible for deductions u/s 80C of the Income Tax act, the interest and the maturity is also tax exempt. Currently PPF provides a return of 7.1% per annum.

To receive a higher payout, it is recommended to initiate PPF investments early in the financial year. This is because making investments early on in the financial year allows for the accrual of interest throughout the year. Moreover, interest on PPF is calculated monthly based on the minimum balance credited to the account between the fifth day and the end of the month.