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Sorting your taxes, investments at the start of the financial year will save you grief later

There are some tedious monetary tasks best dealt with at the beginning of the financial year. Planning your tax-saving investments for the year should be at or close to the top of the list. Making a lump-sum investment in the last month of the financial year will burden your cash flows for the month. Also, if you are investing in tax-saving mutual funds, it is advisable to spread out your investments to avoid having to time the market. If the public provident fund (PPF) is your go-to tax saving instrument, investing at the start of the financial year earns you a higher interest.

Banks deduct TDS (tax at source) on the interest earned on fixed deposits as well as recurring deposits if the interest is over Rs 10,000 a year. So, if you don’t fall in the taxable limit, you will have to submit Form 15G/15H making a declaration that your taxable income for the year is nil, and submit it to the bank to avoid TDS. These declarations are eligible for a year, so you have to submit them at the beginning. Form 15H is for those who are 60-plus while 15G is for younger assessees.

Tax filing season will start soon. A number of documents will be needed, like investment proofs, Form 16 from your employer showing the tax deducted, etc. Also, you’ll need to check the 26AS (consolidated tax statement), which shows the tax deducted against your PAN (permanent account number) to see there’s no mismatch. You have to report all your interest income in your returns though it is exempt from tax up to Rs 10,000. So you will need to collate bank account statements. Also, you have to link your PAN to all your savings bank accounts by June this year. You will also have to link your Aadhaar with your PAN if you want to file returns (the rule comes into effect from July 1). For this, you will have to register on the Income Tax of India website.

It is said that when investing in equities, invest and forget is the right strategy. That said, you should be reviewing your portfolio at least once a year. If you invest in mutual funds or stocks, you need to replace under-performing ones. You also need to get equity and debt exposure right. If you have set specific financial goals for the short and long term, you will need to review them to check if your investments are on track or not.

Lastly, you need to review your life insurance cover as per the change in your liabilities. Buying insurance is not a one-time activity. The life insurance cover should be enough to take care of the loans and advances you have taken, goals such as child education, weddings and to provide your dependents a monthly income after you. Therefore, review your assets and liabilities and increase the insurance cover as per your needs.