Things to do now for Income tax return of financial year 2011-2012

Financial year 2011-12 is coming to an end but this does not mean one can take things easy in the last few weeks. Several other essentials on the tax front have to be completed.Here are a few areas where one needs to pay attention to ensure that there are fewer headaches in the next financial year.

ESTIMATING INCOME

The first part of the exercise starts with estimating the total income for the year, because the last installment of advance tax has to be paid by March 15. This means the investor has to ensure the correct amount of income has been estimated from all sources during the year. This is not difficult, as by early March, most of it has already been received.

Most feel that only those having business or professional income have to go through this exercise. But even the salaried need to do this, in case of income from other sources.

The salaried usually do not have any extra record and hence they need some special effort, otherwise they might end up paying interest for no payment of advance tax.

The additional income can come from various sources like interest on fixed deposits, interest on savings bank account, interest on other investments like government bonds and so on.

The estimation is essential, as this will help in calculation of the total amount of taxes that has to be paid in the final installment, after considering the payments already made. Some early work will give the individual an idea on the amount that needs to be mobilised and also that there is time to complete the process.

PAYING THE ADVANCE TAX

This is an extension of the estimation of total income. The calculation of tax to be paid is just the beginning, because the next step is ensuring the remaining tax is paid by March 15.

By this date, the entire advance tax amount has to be paid. For example, if the total advance tax for the year comes to Rs 60,000 and if Rs 35,000 had been paid in the earlier installments till December, then there is another Rs 25,000 remaining that should be paid.

There are different modes of paying the tax, including using a physical cheque or making an online payment, and the route that leads to easier completion of the process should be followed.

TAX SAVING INVESTMENTS

There is also the tax saving investment that has to be completed for the current financial year. This involves the various investments under Section 80C (limit of Rs 1 lakh) and also taking of the other benefits like deduction for health insurance premium (limit of Rs 15,000 or Rs 20,000 for a senior citizen) or even donations. also invest Rs. 20,000/- in Infrastructure Bond u/s 80CCC.

For many people, there is a problem here, as these are the final days that remain for ensuring the necessary benefits are available for the current year.

There are a whole host of debt options like provident fund, public provident fund, 5-year post office deposit, senior citizen savings scheme, etc, apart from insurance premium and the equity option of equity linked savings schemes.

Choose, depending on your preference, plus the fact that any action today might have a long-term impact. Take the maximum benefit possible under the rules.

ALTERING INVESTMENTS

Some moves might be required in the investment portfolio to limit the tax. For example, if there is some short-term capital gain is booked, some short-term capital loss has to occur to ensure a set off and tax limitation.

The other thing is that even when there aren’t any long-term capital gains tax, the investor might want to book some gain. And then use the funds for some other investment. These changes can be quite useful. There might also be a requirement to restructure the overall portfolio so that there are potential gains due to the transaction in the future.