The Financial Year 2024-25 is approaching its end. Therefore, before March 31, 2025, it is crucial for Non-corporate taxpayers (such as Individuals, firms, etc.) as well as Corporate taxpayers to bear in mind certain important aspects of the Income tax Act, 1961 such as making tax saving investments, making payments for claiming deductions for FY 2024-25, etc. Listed below are some of such aspects:
1. Tax Saving Investments
In order to plan the taxes on income earned in FY 2024-25, it is essential to make tax-saving investments, especially for those who opt for the old tax regime. It is advisable to allocate funds to tax-saving options that balance earnings, savings, spending and tax payments.
Below are some of the available tax-saving investments options:
- Section 80C Investments (like Term Insurance, PPF, ELSS Mutual Fund units, etc.)
- National Pension System (NPS)
- Section 80D Health Insurance
- Section 80G Donations to charitable institutes
2. Advance Tax Payment
As per the provision under Income Tax Act, every person (Other than senior citizen not having income from business & profession) whose estimated tax liability (Net of TDS), for the year is Rs. 10,000 or more is required to pay “Advance Tax” in the same year in which income is earned.
The final installment of advance tax for FY 2024-25 is due on March 15, 2025. The full advance tax liability (net of TDS) for FY 2024-25 must be paid on or before March 15, 2025.
Also, the due date for the payment of advance tax for taxpayers under the presumptive tax scheme of Section 44AD / 44ADA is also March 15, 2025.
3. Section 43B(h) – Payment to a Micro or Small Enterprise under MSME Act
The Finance Act 2023 introduced a provision stating that any sum payable to a registered Micro or Small enterprise (manufacturer or service provider) beyond the credit period or 45 days (whichever is lower) shall be allowed as deduction only on actual payment basis. Therefore, if any sum is due and outstanding to a registered Micro or Small enterprise (for which credit has expired or going to expire on or before 31st March), in order to claim deduction of such expenses in FY 2024-25, last date to make payment to such a Micro or Small enterprise is March 31, 2025.
4. Filing of Updated Return in ITR-U u/s 139(8A)
Updated Income Tax Return can be filed if the taxpayer wants to rectify any error or omissions in the original Return or where no Return is filed, wherein additional tax liability arises on preparing the revised computation of income.
The updated return under Section 139(8A) must be filed within 24 months from the end of the relevant Assessment Year. For FY 2021-22, the updated return can be filed by March 31, 2025, by paying 50% of the additional tax, along with interest, and late fees, as applicable. For FY 2022-23, the updated return can be filed by March 31, 2025, by paying 25% of the additional tax, interest, and late fees, as applicable.
5. Withholding tax provisions applicable on year-end provisions provided payees are identifiable
The taxpayers, who follow mercantile system of accounting, are required to account for all expenses, even if the bills/invoices have not been received. This is done by making provision for various expenses at year-end.
Questions regarding applicability of withholding of taxes on such provision of expenses, is subject matter to litigation, for which various judicial judgments are available.
Therefore, it is advisable to deduct and pay TDS on the amount credited to “Provision for Expenses account” where the Payee & Liability amount is ascertainable.
6. Investment by Trust/Institution to claim exemption u/s 11 of the Income Tax Act, 1961
For claiming exemption u/s 11 of the IT Act by a 12AA/12AB registered Charitable Trusts, it is provided to mandatorily apply 85% of its income earned during the relevant Financial Year wholly and exclusively towards the charitable and/or religious objects for which it was granted registration.
However, where such Trusts/Institutions fails to apply 85% of its income during the relevant FY, they can decide to accumulate its income, either in whole or in part for application towards such objects in subsequent Assessment Years. For this, the Trusts/Institutions are required to invest the income so accumulated or set apart in modes specified u/s 11(5) of the Income-tax Act on or before end of relevant FY i.e. on or before March 31, 2025.
Having said above, in case any amount is so accumulated or set apart by any Trust/ Institution as per above provision for FY 2019-20, the last date to utilize such funds for specified purposes is also March 31, 2025. Accordingly, where the Trust/Institution has not utilized the funds within this date, then it shall be treated as deemed income of Trust/Institution and taxed accordingly.
7. Form 67 – Foreign Tax Credit
The last date to upload the statement in Form 67 to claim the Foreign Tax Credit is March 31, 2025. This applies to taxpayers who have foreign income, where tax was deducted or paid in FY 2022-23, and the Income Tax Return (ITR) was filed within the time specified under Sections 139(1) or 139(4).
8. TDS Corrections up to FY 2018-19
As per amendment in section 200(3) of the Income-tax Act vide Finance Act, (No. 2) 2024, no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in sub-section (3) is required to be delivered.
In view of the above, correction statements pertaining to Financial Year 2007-08 to 2018-19 shall be accepted only up-to March 31, 2025.
