Financial Year Deadline Approaches: Common Mistakes To Avoid Before March 31
One common mistake many taxpayers make is delaying their investment-related transactions until the last day.
With the financial year-end approaching, taxpayers must ensure timely investments for the ongoing fiscal year for it to be counted in their income tax returns. This also means not pushing the documentation process until the 11th hour and planning the income tax-related decisions to maximise savings and investments.
One common mistake many taxpayers make is delaying their investment transactions until the last day. This can result in an increased risk of facing technical glitches due to high demand and missing key updates and investment opportunities.
Other common mistakes include overlooking important tax provisions like Section 80C and Section 80CCD(1b).
Here Are Financial Mistakes To Avoid Before Mar. 31:
Waiting until Mar. 31: Many people push their investment-related decisions until the deadline date, which can lead to panic investment and missed opportunities. Unexpected problems such as technical glitches on investment platforms due to high demand can also lead to losses and delays. Hence, it is recommended to avoid pushing documentation until the last minute and make investment-related decisions after properly understanding taxation laws.
Overlooking Section 80C and Section 80CCD(1B): Income tax laws in India provide various provisions to reduce taxable income through specific investments. Section 80C is one such provision available to individuals opting for the old tax regime. It allows taxpayers to claim deductions of up to Rs 1,50,000 in a financial year on eligible investments and expenses. Some popular options under Section 80C include the Public Provident Fund (PPF), National Savings Certificate (NSC), Employees’ Provident Fund (EPF), Life Insurance Premiums, and Tax-saving Fixed Deposits, among others.
Additionally, Section 80CCD(1B) provides an extra deduction of up to Rs 50,000 for contributions made to the National Pension System (NPS), over and above the Rs 1,50,000 limit under Section 80C. Individuals should take note of these provisions and thoroughly understand what schemes are covered within them to maximise their investment portfolio.
Investing more than needed: In a bid to reduce taxable income, some individuals may invest more than needed. This can be counterproductive in the long term. Investment-related decisions should be made with a long-term horizon by focusing on specific financial goals and their timeline.
Not taking professional advice: Some individuals avoid taking professional advice while making investments and filing taxes to save money. However, this can lead to mistakes, missed deductions, or tax planning opportunities, ultimately costing more in the long run.
