The start of a new fiscal year gives us the opportunity to develop a plan for managing our finances. Whether it’s building an emergency fund, taking out adequate insurance coverage, adjusting investments and tax planning, now is a good time to develop a plan and work on it throughout your life. the year to achieve our financial goals.
“Beginning a fiscal year can help you update or improve your investment plan as you get more clarity on the overall income for the fiscal year and the tax that might be deducted on the whole You can work on an investment plan for the extra surplus you will receive each month after the assessments,” says Harshad Chetanwala, co-founder of MyWealthGrowth.com.
Here are some key financial planning and tax-related tasks you might consider at the start of a new fiscal year.
Update on emergency funds: Financial emergencies can strike at any time, forcing you to dip into your existing savings.
If you don’t have an emergency fund yet, start the new fiscal year to create a separate fund that can meet your financial emergencies. Ideally, use a combination of short-term funds and savings accounts to park funds that can cover at least six months of household expenses.
Are the risks sufficiently covered? At the start of a financial year, check to see if you have adequate health and life insurance plans. Ideally, you should have life coverage of 10 to 15 times your annual net income.
Review your asset allocation: Various studies have shown that the actual performance of your portfolio depends on the asset allocation across different asset classes. The start of a new financial year provides an opportunity to review your investments in stocks, debt, gold and real estate.
Start your tax planning exercise: The right time to do your tax planning is at the start of a fiscal year. It starts with a choice between the old and the new tax system. “Choosing the right tax system at the start of the year rather than when filing the ITR allows for better tax and financial planning. Depending on the income tax regime chosen, the taxpayer can assess the amount of income tax to be paid and carry out IT-related compliances such as payment of withholding tax, declaration of investments to the employer, etc. says Archit Gupta, Founder and CEO of Clear.
Salaried employees will be required to provide their employers with a statement of investment indicating the amount of tax benefits they wish to receive under Sections 80C and 80D, among others. Also, once they receive Form 16 (for fiscal year 2021-22) from their employer, the deadline for filing the ITR (AY22-23) will come, which is July 31, 2022, unless extended by the government. .
Organize your tax documents: Keeping documents such as Form 26AS and AIS handy will help you file an ITR in record time. “You must keep the documents ready related to any other income. For example, house rental agreement, capital gains declaration, invoices, account books, etc. “says Gupta.
When making investments that save you tax, keep a record of the proceeds. “Start compiling tax-saving related documents such as life and health insurance premiums, donations and other receipts for eligible investments and expenses so that it is easy for you to calculate accurately your tax payable,” adds Gupta.
For taxpayers whose total annual tax is Rs 10,000 or more, payment of advance tax must be made in quarterly installments no later than June 15. Also, if you have deposits and an annual income below the threshold, remember to submit Form 15G/Form 15H in April (even if it was submitted the year before) to avoid the TDS levy.
Tips for the year
Choose the right tax regime at the start of the year to better plan your investments
Use a combination of short-term funds and savings accounts to park emergency funds
Keep Form 26AS and AIS handy to easily file your ITR
Submit Form 15G/Form 15H in April to avoid TDS levy on DFs
Review your investments in stocks, debt, gold and real estate. Adjust the mixture if necessary