India follows financial year from April 1 to March 31. Even if the new financial year starts with “Fools Day” (April 1) there are lot of important things related to personal finance you must do now (in the month of April). We list down 7 such things to do:
1. Do your tax planning:
Budget is generally presented in February and some tax laws related to investment or earning do change effective April 1. You must take notice of such changes and plan accordingly. Also, you must calculate what would your estimated income (its easier for salaried), estimated tax outgo and investments that you can make to minimize the same. Also plan when you want to invest in these tax saving schemes. In case you are looking for ELSS or Tax Saving Mutual Funds do set up SIP to stagger your investment.
2. Submit Form 15G or 15H:
In case you are eligible do submit Form 15G and 15H at the start of financial year for all your fixed and recurring deposits. This is required to be done every year to prevent banks from deducting TDS. Remember once the TDS is deducted the only way to get is back is after filing tax return for the year and waiting for the refund. However, do not go overboard and submit in case you are not eligible as that may lead to penal action from income tax department.
The interim Budget raised the TDS (tax deducted at source) threshold for bank and post office deposits from Rs 10,000 to Rs 40,000. For senior citizens above 60, the TDS threshold is already at Rs 50,000. Many banks now allow online submission of the Forms 15G and 15H.
3. Submit tax declaration to your employer:
At the start of each financial year, salaried have to submit tax saving investment declarations along with HRA, Home Loan, etc to their employer. This is necessary as employer use the information to calculate your tax liability and deduct tax every month. In case you miss this more tax would be deducted which you can only claim after filing your income tax return, which would be more than a year away.
4. Choose your salary components as per your needs:
A lot of employers give flexibility to choose your salary structure. You must understand tax free or partially taxable components in the salary and structure it effectively. In case you want to save tax, you may have to keep a higher proportion of salary as reimbursement of phone bills, LTA etc. Also in case you are OK with lesser take home and more investment to your retirement kitty, you can opt for Voluntary Provident Fund and NPS.
5. Invest your increment:
For most salaried, the annual salary revision is effective from April 1. So starting this year you would get increased salary. Its good idea to resist the temptation for lifestyle upgrade. Go for more investment or pre-pay your loans.
6. Make investments in PPF, SSA or NPS:
In case you have PPF, SSA or NPS accounts and do not invest actively in them, make the minimum contribution to keep it active.
7.Keep watch out for full Budget in July this year:
This year the union budget presented in February 2019 was interim budget as the election for Lok Sabha was due this year. When the new government is formed in June a full budget would be presented and some more tax provisions may change. Its good idea to keep an eye on this.