Financial Year-End Alert: Complete These Major Income Tax Tasks Today, March 31 to Avoid Penalties

The Financial Year 2024-25 Comes to an end Today is March 31, and so is the last date for many income tax-related tasks. From filing an updated income tax return (ITR-U) to making last-minute tax-saving investments, taxpayers need to act swiftly to avoid penalties and maximise benefits. Here are the key income tax tasks to complete before March 31, 2025, to avoid penalties, optimise tax planning, and ensure smooth financial compliance.

1.Taxpayers who need to update their ITR for FY 2022-23 (AY 2023-24) must file it before March 31, 2025, to avoid hefty penalties. Filing before this date incurs an additional 25% tax on undisclosed income, while missing the deadline will increase this to 50% plus interest. The government plans to extend the ITR-U filing period to four years starting April 2025, but higher penalty rates will apply. Taxpayers should file their returns as soon as possible to avoid unnecessary financial burdens.

2. Homeowners earning rental income should pay property tax before March 31 to claim deductions under Income from House Property. Timely payment helps reduce tax liability and ensures compliance with property-related tax norms.

3. Many banks have launched limited-period FD schemes with higher interest rates, set to end on March 31. These special FDs offer secure returns and can be a viable alternative to traditional savings plans. Before investing, compare interest rates across different banks and consider whether FDs align with your financial goals.

4. To claim tax deductions under Section 80D, taxpayers must renew or pay pending health insurance premiums before March 31. Failure to do so may result in loss of coverage and ineligibility for tax benefits in the next financial year.

5. Salaried individuals with additional income should ensure they pay their advance tax before March 31. This can be done either by requesting extra TDS deduction from the employer (if payroll allows) or by making direct advance tax payments online to avoid interest penalties under Section 234B and 234C.

6. For those opting for the old tax regime, investing in tax-saving instruments under Sections 80C, 80D, and 80G before March 31 is crucial. Eligible investment options include equity-linked savings scheme (ELSS) funds, public provident fund (PPF), national savings certificate (NSC), and life and health insurance premiums.

7. Lastly , one of the government-backed schemes is closing today, which was exclusively meant for women and girls. The Mahila Samman Savings Certificate (MSSC) offers 7.5% annual interest for a 2-year term. The last date to invest in this risk-free scheme is March 31, 2025. This scheme is considered safer than regular FDs, but compare other high-interest options before investing.

Avoid Last-Minute Rush & Prepare for ITR Filing

Beyond tax-saving investments and compliance, March 31 marks an important financial planning milestone. Keeping records updated, ensuring investment declarations are made, and organising tax documents in advance will ensure a smooth ITR filing process in July 2025.