GST Checklist for Year-End Financial Planning Before March 31

Table of Contents

1. Investment for Tax Deduction
2. Composition Scheme, QRMP (Scheme) & E-invoicing
3. Updated ITR Filing Deadline
4. Letter of Undertaking (LUT)
5. Advance Tax Payment
6. Form 12BB
7. Other Deductions

As the financial year draws to a close, taxpayers are reminded of the essential tasks and deadlines they need to adhere to ensure compliance with tax regulations and optimize their financial planning. From investments for tax deductions to filing updated income tax returns, various obligations require attention before the deadline of March 31. This article serves as a comprehensive guide, outlining key actions that taxpayers must undertake to manage their finances efficiently and fulfill their tax responsibilities.

1. Investment for Tax Deduction

Taxpayers looking to opt out of the default new tax regime under section 115BAC of the Income-tax Act, 1961 and claim deductions under section 80C of the Income-tax Act, 1961 must invest before 31^st March of the financial year, to avail deductions in their Income Tax Return for the respective Assessment Year. Deductions are capped at Rs. 1,50,000 for various items including:

• Life Insurance Premium,
• National Saving Certificate (NSC),
• Public Provident Fund (PPF),
• Post Office Time Deposit,
• Unit Linked Insurance Plans (ULIPs),
• ELSS (Equity Linked Saving Scheme),
• Tax Saver Fixed deposit with Scheduled Bank for 5 years or more
• Principal repayment for a home loan.

2. Composition Scheme, QRMP (Scheme) & E-invoicing

Under GST, taxpayers need to assess their turnover and input tax credit for the year to decide whether to opt for the Composition Scheme u/s 10 of the CGST Act, 2017 (turnover limit Rs. 1.5 Crore) or Quarterly Return Monthly Payment Scheme u/s 39 of the CGST Act, 2017 (turnover limit Rs. 5 Crore) for the next financial year. Those whose turnover exceeded Rs. 5 Crore for the first time in the financial year must generate e-invoices as per Rule 48 of the CGST Rules for all B2B and export supplies from 1^st April.

3. Updated ITR Filing Deadline

Taxpayers have until 31^st March, to file updated income tax returns for the financial year preceding 2 years from the current financial year. For example, 31^st March 2024 would be the last date to file updated return for FY 2020-21, providing an opportunity to rectify any errors or omissions in previous filings.

4. Letter of Undertaking (LUT)

The Letter of Undertaking, often referred to as LUT, is a document commonly used in the context of GST. It is required to be submitted in form GST RFD 11 as per rule 96A of the CGST Rules. Through this document, exporters affirm their commitment to meeting all the necessary GST requirements when exporting goods or services without making IGST payment. It is mandatory for exporters or suppliers dealing with SEZ transactions without GST payment to apply for the LUT using form GST RFD 11 for the new fiscal year.

5. Advance Tax Payment

Taxpayers with a liability exceeding Rs. 10,000 must pay Advance Tax in four installments, with the final installment due by March 15 of every financial year. If missed, then payment before March 31 minimises interest charged u/s 234B of the Income-tax Act, 1961 for failure or delay in advance tax payment. Interest u/s 234B is levied from the first day of the assessment year, i.e., from 1^st April up to the date of payment of self-assessment tax and the interest will be computed on the amount of unpaid/short advance tax at the rate of 1% per month or part of a month for default.

6. Form 12BB

Employees must submit Form 12BB of the Income-tax Act, 1961 to their employer by March 31. This declaration details income earned from multiple sources and investments for tax deductions, allowing employers to adjust the TDS rate accurately. If an employee fails to furnish actual evidence, the employer will not factor in these deductions when calculating the tax liability. Consequently, this may lead to higher TDS deductions, resulting in a lower net salary for the month of March.

7. Other Deductions

Deductions of upto Rs. 25,000 u/s 80D of the Income-tax Act, 1961 (Rs. 50,000 for individuals above 60) are available for medical insurance payments for self, spouse, and dependent children. An additional Rs. 25,000 (Rs. 50,000 for parents above 60) deduction is available for medical insurance payments for parents.

Deductions for charitable contributions u/s 80G of the Income-tax Act, 1961 must be made by the end of the year as per the Income-tax Act, 1961.

Deductions for payment of municipal taxes during the financial year are available under House Property Income u/s 24 of the Income-tax Act, 1961. The last day to make payments for municipal tax is March 31.

In conclusion, proactive financial planning and timely adherence to tax obligations are imperative for individuals and businesses alike. By investing in eligible avenues for tax deductions, choosing appropriate schemes such as the Composition Scheme or QRMP, and meeting deadlines for advance tax payment and filing income tax returns, taxpayers can not only minimize their tax liabilities but also ensure compliance with regulatory requirements.

With the deadline of March 31 approaching, it is crucial for taxpayers to review their financial records, assess their tax liabilities, and take necessary actions to avoid penalties and maximize benefits. By staying informed and organized, individuals and businesses can navigate the complexities of taxation with confidence and achieve their financial goals effectively.