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Make these 6 tax resolutions for 2023 for long-term security

Make these 6 tax resolutions for 2023 for long-term security


Making new year resolutions is an annual ritual for many of us, but unfortunately, most of these promises to ourselves never get fulfilled. However, there are some resolutions, especially those related to tax, that one cannot afford to ignore. The tax department is neither lenient when it comes to deadlines, nor merciful when dealing with unpaid taxes. So, here are a few tax promises that you should make to yourself. These tax-related new year resolutions will not only ensure you don’t end up with tax problems during the year, but also bring peace of mind and long-term security.

I WILL CHECK MY ANNUAL INFORMATION STATEMENT (AIS) WHEN FILING TAX RETURNS
The Annual Information Statement (AIS) has details of all the financial transactions conducted by you during the
fi nancial year. It will have details of incomes (salary, profession, rent, interest and capital gains) as well as expenses (foreign exchange, purchase of gold above Rs.50,000 in cash and Rs.2 lakh by card) and investments (mutual funds, stocks, bonds). It also has details of the tax paid on your behalf by your employer and the TDS deducted by others. Be sure to check your AIS and verify if the details of your financial transactions are correct.

I WILL VERIFY MY TDS DETAILS IN FORM 26AS
The Form 26AS is your tax credit statement and has details of the TDS deducted on your behalf and the tax collected at source (TCS) paid by you. Access your Form 26AS either through the income tax department portal or through your netbanking account and check if the TDS and TCS deductions are correctly mentioned in it. If for some reason some TDS or TCS has not been credited to you, you must contact the deductor immediately. A periodic check of the Form 26AS will ensure you are not running around at the time of tax filing.

I WILL NOT IGNORE MY FOREIGN ASSETS AND EARNINGS
Your tax compliance becomes a little complicated if you have foreign assets. All foreign bank accounts, financial interests, immovable property, accounts in which an individual has signing authority, and any other capital asset held by the individual outside India, must be reported in the tax return, irrespective of the total income of the individual. Many taxpayers omit this, but this is not recommended. Not disclosing foreign assets can invite serious charges under the Black Money (Undisclosed Foreign Income And Assets) and Imposition of Tax Act, 2015. Even if a return for a previous year has been processed, cases can be opened even up to 16 years later, and penalties can be levied.

I WILL OPTIMISE MY TAX BY UTILISING ALL AVAILABLE TAX DEDUCTIONS
The Tax Optimizer from Taxspanner helps people understand how and where they can save tax by utilising the various available deductions. However, tax returns indicate that many taxpayers don’t fully use the deduction limits under Section 80. Either they are not aware of the tax rules or don’t plan their investments well to avail the benefits. This leads to unnecessary outgo of tax on hard-earned income. One must plan investments to claim the full benefit of tax-saving options by up to Rs.4-5 lakh as follows: Section 80C (max Rs.1.5 lakh), Section 80CCD(1b) (max Rs.50,000), Section 80D (max Rs.75,000-Rs.1 lakh) and Section 24 (max Rs.2 lakh).

I WILL HARVEST LONG-TERM CAPITAL GAINS FROM STOCKS AND EQUITY FUNDS BEFORE 31 MARCH
Stock markets have done very well after the Covid scare. If your stocks and equity funds have gained during the year, harvest up to Rs.1 lakh long-term capital gains to lower your future tax. Up to Rs.1 lakh long-term capital gains from stocks and equityoriented funds are tax-free in a financial year. But you need to book profits before 31 March to pocket these. The same stocks and equity funds can be bought again, but their price of acquisition for tax computation will get reset at a higher level. Ask your mutual fund house, CAMS or Karvy for a capital gains statement to know how much capital gains need to be harvested.

I WILL PAY ADVANCE TAX ON INTEREST, DIVIDENDS AND CAPITAL GAINS
A lot of taxpayers don’t report their interest or dividend income because they are under the misconception that if tax has been deducted, no more tax is due. But tax deducted at source (TDS) is only 10%, while both interest and dividends are taxed at the normal rate applicable to the individual. Taxpayers in the higher income brackets have to pay more. If you have invested in bonds, NSCs or bank deposits, or have received dividends, make sure you pay the tax on these incomes by the due date. All these incomes will show up in your Annual Information Statement (AIS), so there is just no way you can escape the liability. Also, keep in mind that unpaid tax attracts a penalty of 1% per month of delay.

(The author is CEO AND FOUNDER, TAXSPANNER.COM.)

10 simple personal finance resolutions to make this year



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