Quick financial checks before the year ends

The current financial year is about to end, and this is the best time to review your plans to maximize savings and get a solid head start for the year ahead. Good financial management will help you save time, money, and stress, prioritize expenditures, make informed decisions, and allocate resources effectively. As we approach 31st March, it is important to consider the hits and misses of the year with this quick guide.

Double check your taxes paid vs. taxes owed 

At the outset, calculate the taxes to be paid for the financial year including income from all sources such as:

• Income from Salary
• Income from Rentals
• Income from business 
• Income from Investments such as Stocks, MFs, Bonds, etc. (Capital Gains/Losses)
• Income from Sale of Properties (Capital Gains/Losses)

If taxes paid is significantly lower than taxes owed, pay advance tax for the difference as early as possible and before the financial year ends on 31st March 2023. Paying taxes owed on time prevents hefty penalty interest at the time of filing your returns. 

Maximize tax-saving options 

Under Section 80C of the Income Tax Act, 1961, a person is allowed to claim a deduction of up to INR 1.5 lakh by investing in tax saver products such as FDs, NPS, PPF, or mutual funds. Make sure that you take full benefit of this provision. In case someone wants to fund higher education for their children then the interest on an educational loan is completely deductible under Section 80E. Section 80TTA allows individuals to deduct interest up to 10,000 in a financial year. 

The pandemic has put healthcare as a major focus area in many households. Good health insurance coverage can help in taking care of the family’s medical expenses and it also helps you save taxes under section 80D. Health insurance for dependent senior citizens can also be included for tax exemption under this section. Section 80D allows deductions up to INR 1 lakh. 

Explore all these potential tax-saving options to reduce your tax liability as far as possible. 

Engaging with professional financial advisors

If you are new to financial planning and management or have little experience, consulting a CA or a qualified financial advisor is never a bad idea. Professional financial advisors based on your goals & needs can suggest better ways to balance your investments and can also possibly help you maximize benefits in the form of tax savings made during the financial year. 

A financial advisor can provide information and insights on different aspects taking into consideration your goals & needs, dependents, current age, and retirement target age – this includes the amount that you need to invest in different investment channels every month, health and life insurance coverage needed, etc.

Conclusion

The earlier you assess your financial situation, the sooner you can make the required tweaking without stress. Keeping everything in order periodically about your finances will be the best decision you will make as the year closes.

Author: Saurav Ghosh, Co-founder,Jiraaf