Financial Year 2019-20 is about to come to an end and after the outbreak of Coronavirus, most businesses have taken a downturn. But hopefully the new financial year will bring new hopes for Business Owners. Before the year ends, Business owners should ensure that they check off these points from their Checklist so as to save themselves from paying fines and penalties in the new accounting year.
1) Linkage of Aadhaar with PAN
It must be noted that the return of income tax payer will not be processed if Aadhaar is not linked to PAN upto 31 March 2020.
2) Make Investments to Save Tax
Make investments eligible for deductions under Chapter VI A. Subject to certain conditions, different types of assesses are entitled for deduction of specified amount from Gross total Income before arriving at the Taxable Income e.g. Individuals and HUFs are entitled for deduction u/s 80C of the Income Tax Act for a deduction up to an amount of investments of Rs. 1,50,000/- and an additional deduction of Rs. 50,000/- u/s 80 CCD for investments in National Pension Scheme (NPS) subject to certain terms and conditions.
Further deductions on account of payment of premium for health insurance u/s 80D or u/s 80G are allowable only if the investment/ payment has been made on or before 31st March 2020.
3) Cleanup Your Loan Accounts
Verify loan accounts and cleanup them up if necessary. If an assessee has given or taken any temporary loans, hand loans and are outstanding, try to repay / recover the same on or before 31st March 2020. This will help in improving the balance sheet position of the ratio of assets and liabilities, Debt Equity Ratio etc. Temporary loans, hand loans can be again given or taken on or after 1st April 2020.
Since the balance sheet will be prepared as on 31st March 2020, try to square off the assets and liabilities which would show unfavorable position if not squared off on or before year end.
4) Investment Strategies to claim deductions
Various investments are allowed to claim exemptions and deductions along with benefit of opportunity to earn returns on such investments. Thus to avail maximum deductions, such investments are to be made before 31st march to include it in the previous year for the future prospect.
5) Claim reimbursements in case of salaried employees
Salaried individuals are entitled to certain reimbursements on the basis of their salary structure such as medical reimbursements, Telephone, leave travel, house rent allowance etc. To claim such tax exemption, such persons need to submit the proof of such expenses to their employers.
6) Reconcile GST Ledgers
GST payments are done either via tax credit or via challan payments. The taxpayers should reconcile the Cash Ledger, Credit Ledger and Liability Ledger on GSTN portal with their books of accounts. All the entries should be done before the year-end. Further, debit notes, credit notes, rate difference, discount, etc also should to be reconciled.
7) Compulsory investment under PPF
The minimum compulsory annual contribution to PPF account is Rs. 500. So if you have PPF Account then you need to contribute at least Rs. 500 per financial year. The last date of this contribution is 31st March, 2020.
8) Calculate GST turnover
Businesses which are not yet under the GST registration limit of Rs.20 lakh, should keep track of their turnover. The total turnover up to 31st March is to be calculated for the purpose of determining the important aspects like applicability of GST Registration, Eligibility of opting Composition Scheme, and Applicability of Filing of specific returns.
9) File Income Tax Return
Time Barring Return for AY 2019-20: 31st March 2020 is the last date to file pending Income Tax Returns for financial year 2018-19. Its important to keep your income tax returns upto date. So, if you missed the deadline for filing of your ITR for year ended 31 March 2019, get it filed before 31 March 2020 with a small penalty.
10) Manage Professional Income & Expenses
In respect of professions following cash system of accounting, business expenses are allowed to be deducted only if they are actually paid on or before 31st March 2020. Hence, it is advisable to make payments of all business expenses related to the period.
Deposit all professional receipts in bank account before 31st March 2020 without pushing it into the next financial year. This is because the payer must have deducted TDS on the same and will file TDS Return by showing the amount paid to you along with corresponding TDS.