It’s important to tick off your personal finance checklist before March 31. By March 31, you should have completed all critical financial tasks for the year, allowing you to begin planning for the coming year.There are many aspects that a taxpayer should look into as we approach the end of the financial year.
Determining Residential Status As Per Tax Laws In India For FY 2021-22
"The last two years have seen many Indian citizens or people of Indian origin travel to India and get stuck in India due to the COVID-19 related travel disturbances. In such cases, it is important to evaluate the residential status in India to ensure that the taxability is determined in the correct manner," says Akhil Chandna, partner, Grant Thornton Bharat LLP, an accounting and advisory organisation.
Taxability in India depends on the residential status of an individual. Individuals who qualify as ordinary tax residents in India will be taxed in India on their worldwide income.Non-residents are taxed on income earned from sources in India or income received in India.
Determining Various Sources Of Income And The Applicability Of Advance Tax
Taxable income is generally divided into the following five heads of income: income from salary; income from house property (rental income); income from capital gains; income from business or profession; income from other sources (for example, interest, dividend, or any other income which does not fall under above heads).
Many people forget to take stock of interest earned on savings accounts, dividends received from shareholdings, etc. It is important to collate details of all such income earned during the year and determine the taxable income and tax thereon. "Advance tax is payable if the tax payable during the year, after credit for tax withheld (TDS), exceeds Rs 10,000. Advance tax due is required to be paid in four instalments during the financial year; the last instalment is due by March 15. Non-payment or short payment of advance tax results in interest on shortfall," says Chandna.
Review of the Annual Information Statement (AIS)
The AIS is available on the income-tax e-filing portal and provides a comprehensive summary of various financial transactions undertaken by taxpayers, including details of taxes withheld or paid during a financial year, specified financial transactions, tax demand or refund, and tax proceedings. "Review of the AIS will help individual taxpayers by ensuring that all financial transactions which may be taxable are duly identified and considered for calculating taxes," adds Chandna.