Accounting areas to take care of before the Financial Year ends
You must take note of specific vital duties as the end of the financial year approaches. If you are a company owner, then the value of these duties increases considerably. Calculating your advance taxes and savings to save some taxes would keep you in an outstanding position for the times ahead.
Per year, the financial year in India runs from April 1 to March 31. As a result, March 31 is an important business date to ensure that all vital financial obligations are fulfilled, important decisions are made, and other mandatory items are taken.
Individuals who need a trading system should find out the transactions accrued until March 31 and record the equivalent correctly in the account. The financial year-end deadline of March 31 is equally criticized for experts who obey the money method of bookkeeping, i.e., the registration of exchanges based on accurate receipts and expenditures, as explained in this article.
1. Calculate to be paid advance tax
Income tax complies with the “Pay as You Earn” guidance. Accordingly, Advance Income duty was due no later than June 15 , September 15, December 15, and March 15, for the entire financial year from April 1, 2020, to March 31, 2021. If an assessee has not paid 90% of his expense payable by a creation fee system at the very latest on March 31, 2021, at any rate, interest will commence from April 1, 2021, until the payment date.
An assessee should then ascertain the assessable pay as reasonably as it could under the circumstances be required, measure the cost obligation, and subtract the Tax Deducted at Source (TDS) to apply the whole advance taxable income and pay the equivalent by March 31. The advance tax paid must be credited to the central government bank account before March 31 and should receive the challan sequential number.
2. Make investments to save tax
To save from taxes, investments have to be made in such away. E.g., an individual and HUFs (Hindu Undivided Family) are permitted for tax deduction u/s 80C of the Income Tax Act for subtraction up to a measure of ventures of Rs. 1, 50,000/- Additional deductions for repayment of the health insurance premium u/s 80D, contributions u/s 35AC or 80G are permitted only if the contribution or payment has been made on or before March 31.
3. Manage physical stock
On March 31, take a physical inventory of raw materials, construction work, refined products, equipment and supplies, mobile instruments, and consumables, and so on. Similarly, compile data on its reasonably approximate value as of March 31 and the same shall be disclosed in the declaration of the company’s financial position.
4. Purchase of fixed resources for business
Buy cash devaluation capital (half of the determined rate of depreciation). Suppose a significant or fixed asset is obtained for business in the earlier year and is used for 180 days or more for business or occupation. In that case, the depreciation shall be allowed to the rate for that form of asset recommended.
Where the resource has been put to use for company or occupation purposes for a period of fewer than 180 days in the preceding year, the depreciation shall be limited to 50% of the total measured at the percentage prescribed.
Therefore, if you want to purchase any fixed asset with the ultimate objective of use in the organization, buy it and put it to use for business purposes before March 31, to benefit from depreciation at the rate of half of the usual rate of depreciation.
5. Claim extra reduction an incentive
For the industrialized unit, you can claim for additional depreciation for assets. Regarding the new plant and hardware bought and built by a member of the assessee engaged in assembling or creating after March 31, 2018, an additional 20% of actual plant and equipment costs will be depreciated subject to precise terms and conditions. Should such plants and hardware be purchased for less than 180 days, an additional devaluation of 10% under several separate terms and conditions will be allowed.
Therefore, an industrialized unit will benefit from this additional devaluation derivation by acquiring and using plants and hardware by March 31, 2019, at the latest. Some assessments are eligible before March 31, 2019, to deduct incentives to secure new plant and system by 15%.
In the year-end financial proceedings, it is continuously unbelievable to keep these exercises easy. Special accounting software will allow you to plan for the coming monetary year to maintain a strategic distance from the last moment’s burden.
It is fair to assume that you can end up in serious trouble if you do not meet your tax obligations before the allotted time frame. For the management of all business organizations, the measurement and settlement of taxes such as GST filing and luxury tax, among others, is necessary.
Shreeda Shah is a Chartered Accountant associated with Legalwiz.in as a Business Advisor. She has a good expertise over Direct Taxation and Indirect Taxation compliances.