Before March 31 There Are Five Things You May Do To Reduce Your Income Tax

 

Before march 31 there are five things you may do to reduce your income tax

It is important to ensure you have maximised the tax benefits available to you as the fiscal year comes to a conclusion. There are further actions you can take in addition to using the Section 80C deductions to lower your taxes. Here are some wise tax decisions you should make in the coming days.

1. LINK THE PAN CARD AND AADHAAR NUMBERS
The deadline to link your PAN to your Aadhar is also March 31st. Do this right now if you haven't already. Neglecting to link PAN to Aadhaar could have detrimental effects. From April 1, your PAN will no longer be valid and cannot be filed or quoted for any transactions. Online transactions and verifications are also made simple by linking PAN to Aadhaar.

2. PURCHASE LIFE INSURANCE TO GET A TAX BENEFIT
One of the key factors that make life insurance so popular with investors is the tax-free return. However, the Government Budget for this year proposes taxing life insurance policy maturity proceeds if the total yearly premium paid surpasses Rs. 5 lakh. If this plan is approved, insurance plans purchased on or after April 1, 2023, will be subject to taxation. Get a policy before March 31 if you're planning to invest in a life insurance investment to take advantage of the discount.

 
3. OPEN AN ACCOUNT WITH THE NATIONAL PENSION SYSTEM
Most taxpayers will have already used up their Section 80C tax savings cap of Rs. 1.5 lakh. But do you also claim the additional Rs. 50,000 National Pension System (NPS) contribution deduction allowed under Sec. 80CCD (1b)? To save extra tax this year, open an NPS account right away. You might save up to Rs. 15,600 in taxes if you are in the 30% tax bracket. It only takes a few minutes to register an NPS account online if your PAN is connected to your AADHAAR. Create an account by visiting the NPS website at enps.nsdl.com and following the on-screen directions.
 
4. INVEST IN DEBT FUNDS TO ADVANTAGE DOUBLE INDEXATION
There are signs that the interest rate cycle is shifting after the Central Bank consistently raised rates. Debt funds will generate positive returns if interest rates decline or even remain unchanged. But there's another justification for purchasing debt funds and other non-equity investments by March 31 at the latest. If the investment is kept for at least three years, the indexation advantage becomes available. But, you receive an additional benefit of an additional year if the holding period extends to the fourth financial year. Do not sell your debt funds at this time for the same reason. To receive the indexation benefit of more than one year, wait until April 1 for the start of the new fiscal year.
 
5. Five Harvest Capital Gains And Losses
The previous two years have seen a lot of volatility in the stock market. It's time to book them by March 31 whether you've made gains or losses. Up to Rs. 1 lakh in long-term capital gains are tax-free. Selling some profitable mutual funds and stocks makes sense in order to register profits that are tax-free up to Rs. 1 lakh. The following day, you can purchase them back. It's time to book your losses if your stock market luck has been bad. You can offset these losses with profits from other assets. Only long-term capital gains can offset long-term capital losses. Yet, short or long-term capital gains may be used to offset short-term capital losses. Moreover, unadjusted losses may be carried over for a maximum of eight fiscal years.