With the deadline of March 31, 2023 fast approaching, several critical tasks must be completed to avoid potential headaches in the upcoming financial year. Here are some of the key ones you need to accomplish:
Link PAN and Aadhaar
The last date for linking the Permanent Account Number (PAN) and Aadhaar number is March 31. If you miss the deadline, your PAN will become inoperative. Maneet Pal Singh, partner, IP Pasricha & Co says, “If you fail to link them, you may not be able to file your income-tax return (ITR). Penalty for non-compliance is up to Rs 1,000.”
You need to first pay the penalty of Rs 1,000 to link your Aadhaar with PAN before March 31, 2023. Linking PAN with Aadhaar has several advantages. Singh says, “The linkage will help eliminate duplicate PAN cards, ensure accurate tax assessment, and curb tax evasion.”
While the government may extend the deadline, don't depend on it.
Submit Form 12B
If you have changed jobs, make sure you fill and submit Form 12B.
Pallav Pradyumn Narang, partner, CNK, says, “Form 12B must be mandatorily submitted to the new employer if you have joined it in the middle of the financial year.”
The primary purpose of this form is to disclose the employee’s income earned from the previous employer. Providing this information allows the new employer to calculate and withhold the correct amount of tax deducted at source (TDS) from the employee’s salary for the rest of the year and generate a combined Form 16 at the end of the financial year.
International tax advisor Adithya Reddy says, “An employee joining a new company on, say, May 1, 2022, should file Form 12B and submit it to the new employer for the period between April 1, 2022 and April 30, 2022.”
File updated ITR
The deadline for filing updated ITR (ITR-U) is March 31, 2023, for the assessment year (AY) 2020-2021 (FY2019-20). The Finance Act of 2022 had introduced this new ITR filing facility called updated return. It provides assessees the chance to update their ITRs within two years. Any person who has made an error or omitted certain income details in the original, belated, or revised return can file ITR-U.
Naveen Wadhwa, deputy general manager, Taxmann says, “An updated return can be filed by a taxpayer within 24 months of the end of the relevant assessment year even if he has not earlier filed a return for the relevant assessment year.”
A taxpayer has to pay an additional 25 per cent (if the return is filed within 12 months from the end of the relevant AY) to 50 per cent (within 24 months from the relevant AY) of the tax payable on the additional income declared, along with interest.
An updated return can’t be filed if it increases the refund.
Mutual fund nominations
The Securities and Exchange Board of India (Sebi) has asked all asset management companies (AMCs) to set March 31, 2023 as the deadline for mutual fund investors to appoint nominees.
Ankit Jain, partner, Ved Jain & Associates, says, “If a person doesn’t want to furnish the name of a nominee, he would have to ‘opt-out’ and specifically intimate that he doesn’t want to nominate anyone.”
CAMS and KFintech have enabled online options for updating nominee details. Visit their websites and update all the folios linked to your PAN at one go.
If an investor doesn’t act by March 31, 2023, folios that don’t have a nominee will be frozen. In case of MF investments made through a brokerage account, the demat account must have a nominee.
Jain says, “The investor won’t be able to buy or redeem units from that folio, and SIPs in those folios will also be stopped until the nomination is updated.”
Vivek Rege, board member, Association of Registered Investment Advisors (ARIA) says, “Nominate rather than take the opt out route. If the nominee is a minor, the details of the guardian, along with his signature, must be provided.”
The nominee can’t be appointed the guardian in the same folio. For example, if one nominee is a major and the other is a minor, then the major nominee can’t be the guardian for the minor nominee.
How to link Aadhaar with PAN online
· Go to the Income Tax e-filing portal (incometaxindiaefiling.gov.in)
· Under the ‘Quick Links’ heading, click on the ‘Link Aadhaar’
· Enter the ‘PAN Number’ and ‘Aadhaar Number’ and click on the ‘Validate’ button
· When the penalty payment is verified, a pop-up message will appear: ‘Your payment details are verified’; click on the ‘Continue’ button
· Enter the details and click on the ‘Link Aadhaar’ button
· Enter the OTP sent to your mobile number
· The Aadhaar-PAN card linking request will be successfully submitted
Source: Clear