Tax Saving Checklist: Essential Steps before the Year Ends

As the calendar year 2024 nears its end, it’s an opportune time for taxpayers in India to review their financial and tax-related activities. Proper planning can help minimize tax liabilities and align financial strategies with long-term goals. Below is a detailed checklist to guide taxpayers in optimizing tax benefits and ensuring compliance under the Income Tax Act, 1961.

1. Filing Belated Returns: Deadline—31st December 2024

Taxpayers who missed the initial deadlines for filing Income Tax Returns (ITR) can still file a belated return under Section 139(4) by 31st December 2024, provided the assessment hasn’t been completed.

• Impact of Late Filing: 1. Restriction on carrying forward losses (except house property loss). 2. Interest consequences under Sections 234A, 234B, and 234C. 3. Late filing fees as per Section 234F.
• Example: The belated return for the financial year 2023–24 can be filed until 31st December 2024.

2. Filing Revised Returns: Deadline—31st December 2024

If taxpayers identify errors or omissions in their originally filed ITR, they can revise the return by 31st December 2024.

• Conditions: 1. The original return must not have been processed or assessed. 2. Revised returns allow taxpayers to rectify mistakes and avoid penalties.

3. Payment of Advance Tax: Third Installment Due—15th December 2024

Taxpayers with a tax liability exceeding ?10,000 after TDS and other reliefs are required to pay advance tax in four installments.

• Installment Breakdown:

Paying the advance tax by the stipulated deadlines helps taxpayers avoid interest under Section 234C.

4. Direct Tax Vivad Se Vishwas Scheme 2024: Apply by 31st December 2024

The Direct Tax Vivad Se Vishwas Scheme provides an opportunity to settle tax disputes at reduced costs.

• Payment Schedule:

Taxpayers can avoid paying an additional 10% by applying for the scheme before the end of the calendar year.

5. Deductions under Chapter VI-A

To maximize tax savings, taxpayers must complete investments and eligible expenditures under Chapter VI-A by 31st March 2025. These deductions are available under the old tax regime and cover areas such as:

• Investments in PPF, ELSS, and NSC.
• Premiums for life and health insurance policies.
• Tuition fees for children under Section 80C.
• Repayment of home loans and donations to approved charitable institutions.

A proactive approach ensures that taxpayers fully utilize the benefits available under the IT Act.

6. Submitting Proofs to Employers

Taxpayers who opt for the old tax regime must submit proofs of eligible deductions to their employers to adjust TDS accordingly.

• Documents to Submit: 1. Receipts for investments in tax-saving instruments (PPF, ELSS, FDs). 2. Insurance premium receipts for health and life policies. 3. Tuition fee receipts for children’s education. 4. Rent payment receipts for claiming HRA deductions.

Failure to submit these proofs can result in higher TDS deductions, affecting liquidity. Any excess TDS can be claimed only as a refund when filing the ITR.

Conclusion

A well-structured approach to year-end tax planning can significantly reduce tax liabilities while ensuring compliance with statutory deadlines. By filing belated or revised returns, paying advance tax on time, leveraging the Vivad Se Vishwas scheme, and optimizing deductions, taxpayers can secure their financial standing and align their finances with long-term goals.

With only a few months left in the financial year, taxpayers should act now to make informed decisions and avoid last-minute stress. Planning ahead today ensures a smoother and more tax-efficient tomorrow.