Five financial tasks to do at the beginning of new financial year

The new financial year has started. The financial experts stress upon the need to start financial planning and tax planning at the beginning of the financial year itself. Read the article to know the five essential steps to be taken at the beginning of the financial year.

Very silently the new financial year 2016-17 has started its journey on 1st April, 2016. Salaried people have become little bit complacent after the end of old financial year. The experts are advising the tax-payers to start financial and taxation planning from the very beginning of the financial year. In this article, we will discuss the steps to be taken immediately at the beginning of the financial year 2016-17.

Get papers ready for tax filing

The income tax filing deadline is three months away, but the tax-payers should start collecting the necessary papers for tax filing. These include Form No. 16, tax credit receipts, other documents for foreign countries, life insurance receipts, health insurance receipts, etc. In addition, total interest from all bank accounts, accumulated interest from bonds, NSCs and other fixed interest instruments are to be kept in one place for interest calculation. If the tax-payer has a home loan or an education loan, the certificate of interest is required to be collected for claiming deduction under Section 24 and Section 80E of the Income Tax Act. The task may take maximum seven days.

Organise investment portfolio

At the beginning of every financial year, the retail investors must take stock of the performances of his/her investment instruments. As for example, if the equity portfolio has done well and the investor has achieved the target, he/she should shift the accumulated amount (either fully or a major part) to the less volatile debt instruments. Similarly, if the performance of any particular type of investment is less than desired level, a conscious decision is required whether to continue or increase the investment in that particular investment instrument. This decision is required to be taken based upon macro-economic environment, sectoral performance and various other factors including personal necessity. This task should not take more than seven days for an investor.

Increase investments

A retail investor must try to increase the quantum of investment at the beginning of every financial year. He/she must anticipate the increase in salary, take note of the new taxation policy, new tax rate, personal requirements and various other factors, and start saving accordingly from the very beginning of the financial year. For example, if an investor invests in Equity Linked Saving Scheme (ELSS), he/she must start an SIP in April itself. The equity investment must be staggered over the entire financial year. Experts say that SIP investment in equity mutual funds including ELSS gives better return than lump-sum investment. This act may take three days for an average retail investor.

Give Provident Fund mandate to the employer or increase deduction of PPF

In India, the salaried people generally have deep-rooted faith on investment in the Provident Fund. There are various reasons behind this. One is safety of the investment and the other is due to the fact that Provident Fund investment can't be attached by any Court of Law. Although, there is a drastic reduction of interest rate on the Provident Fund investment in the current year, investors should increase the monthly mandate in this reliable instrument at the beginning of financial year, taking into consideration the increase in pay and commitments during the financial year. This activity should not take more than a day.

Submit form 15G and form 15H

This is the most appropriate time to submit form 15G and form 15H to avoid deduction of tax on interest payment. Form 15G is applicable for persons under 60, have no tax liability and total interest income is less than Rs. 2.5 lakh. Form 15H is applicable for individuals above 60. This simple task can be complete within two working days.

So investors! Stop procrastinating and finish these simple but essential tasks in say fifteen days! Complete these tasks in April itself, free yourself from anxiety and be a prudent investor.

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Author: Kailash Kumar18 Apr 2016 Member Level: Platinum   Points : 2

The author has developed a very informative and useful article of educative nature. However, I would like to understand the procedure adopted for income tax deduction in case of pensioners. Is TDS applicable in case of pensions also i.e. do the banks disbursing pension deduct income tax at source or not? Normally in case of fixed deposits etc. TDS is deducted at source in case Form 15 G or 15 H is not submitted by the investors. Also in case the TDS is deducted by the banks in respect of fixed deposits, then what happens if the depositors have investment in more than one bank or in more than one branches of the same bank? Is deduction by banks sufficient in such cases or additional income tax is required to be deposited if the total interest income exceeds the minimum slab.

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