Money Matters: Complete this Checklist Before the New Financial Year 2023

Posted on: May 4, 2023 | | Written by:

Money Matters: Complete this Checklist Before the New Financial Year 2023

Published on May 03, 2023. EST READ TIME: 3 minutes

As we approach the start of a new financial year, it’s a great time to reflect on our savings, investments, and budget plans. Whether you’re an individual, a family, or a business, having a solid financial plan in place is crucial for achieving your short-term and long-term financial goals. With the COVID-19 pandemic still ongoing, it’s essential to take extra precautions and stay vigilant when it comes to managing your funds. So, here are some necessary steps we should take before the new financial year 2023 to ensure we are well-prepared for any challenges.

1. Linking PAN and Aadhaar

This is the first thing you must do before the new financial year after paying a penalty of Rs 1,000. Your PAN will become inoperative if your PAN and Aadhaar are not linked before the due date. Now, if your PAN becomes inoperative, there are many things which you cannot do. First, you cannot file your Income Tax Returns (ITR). Since you cannot file ITR, you will not get the refund that you are eligible for. Moreover, the TDS will be charged at a whopping 20%. Second, without PAN, you will not be able to do certain transactions, such as investing in mutual funds, if you want to invest more than Rs 50,000. If you provide an invalid or fake PAN where there’s a requirement, you will be fined Rs 10,000.

2. Tax-saving investments

There are many savings schemes which can help you avail of tax benefits. But make sure the investments in such schemes are made before the financial year 2023-24 so that when you file your tax returns, you can claim a refund if there’s any. Some tax saving investments or 80C investments are Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Pension System (NPS), Equity-Linked Saving Scheme (ELSS), 5-year FD, premium paid towards life insurance and health insurance policies, Mediclaim policy and more. The premiums have to be paid before the financial year 2023-24.

3. Advance tax payment

If you don’t pay advance tax before the end of the financial year, you will be charged a 1% penalty on the tax amount due till you clear the dues or until you file your IT returns. The advance tax has to be paid every quarter by an individual if the tax liability is more than Rs 10,000 in a financial year. So, ensure all your advance payment dues are cleared before the due date.

4. Updated ITR filing

A taxpayer eligible to file an updated ITR for the assessment year 2021 (FY 2019-20) needs to file the updated ITR before the new financial year begins, after which you cannot file your updated ITR.

5. Submit Form 12B

Form 12B contains information about an individual’s previous employment details, including the person's previous income, TDS, etc. If you join a new organisation or company in the middle of the financial year, you must submit Form 12B to your current employer. Your new employer will know your previous income from this form, and your TDS deduction will be made accordingly. After Form 12B is submitted, the current employer will generate a combined Form 16 at the end of the year. But, if you don't submit it, you will receive Form 16 from both organisations and must consolidate it yourself. You may also be charged advance tax penalties along with interest.

6. Invest in Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a 10-year investment scheme only for senior citizens. The scheme offers a 7.4% guaranteed rate of interest. If you are aged above 60 and wish to invest in PMVVY, you should do it before the financial year ends, after which applications will not be allowed.

7. Invest in insurance

Consider investing in insurance policies to avoid taxes on maturity proceeds. The recent budget has introduced a tax on high-ticket life insurance policies, but you can circumvent this tax by investing in a policy with a premium of Rs 5,00,000 or more before the new financial year. If you do so, the maturity proceeds will be tax-free. However, the maturity proceeds will be fully taxable if you invest in the same policy after the new financial year begins. It’s important to note that this tax rule applies to all life insurance policies except for ULIPs. Therefore, ULIPs are not subject to this particular tax rule.

8. Nominee registration

All mutual fund investors must mandatorily register nominees as per SEBI guidelines and complete the process of nomination before the start of the financial year 2023-24. Folios without a nomination will be `frozen,’ and no transactions can be done.

Conclusion

As you enter the financial year 2023-24, make sure you have taken care of the above things before the deadline to avoid paying any penalty. Before the new financial year, you can also avail yourself of tax benefits by investing in savings schemes like a health insurance plan, Mediclaim policy, individual health insurance, PPF, and mutual funds.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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