As the calendar year 2024 winds down, it’s essential for taxpayers to evaluate their financial status and take steps to minimize tax liabilities. While India’s current fiscal year ends on March 31, 2025, this period provides an excellent opportunity to familiarize oneself with available tax benefits under the Income Tax Act, 1961 (IT Act). A proactive approach can not only save money but also align financial decisions with long-term goals.
In this article, we provide a brief overview on a few critical actions for taxpayers in India to streamline their year-end tax planning.
Taxpayers who missed their original ITR filing deadlines (July 31 or later, depending on their audit requirements) can still file a belated return under Section 139(4) by December 31, 2024, if the assessment isn’t concluded. Taxpayers need to note even though such belated return can be filed, such late filing can lead to restrictions on carry forward losses (excluding house property losses), imposition of the requisite interest & penalties and late filing fees.
Taxpayers who detect errors in their original ITR can file a revised return by December 31, 2024, provided the original return hasn’t been processed and the assessment isn’t completed.
Taxpayers with a tax liability of Rs. 10,000 or more (post adjustments for TDS and other reliefs) are required to pay advance tax in four instalments during the relevant financial year. Failure to meet these obligations may result in interest penalties u/s 234C of the IT Act, which imposes simple interest at the rate of 1% per month or part of a month for underpayment or non-payment of instalments.
The deadlines and payment requirements for advance tax are as follows:
| Due date of Installment | Amount Payable | Minimum Amount Payable for Non-applicability of Interest u/s 234C of IT Act | Interest Payable u/s 234C of IT Act |
| On or before 15th June | 15% | 12% | 1% x 3 months x shortfall in tax |
| On or before 15th September | 45% | 36% | 1% x 3 months x shortfall in tax |
| On or before 15th December | 75% | 75% | 1% x 3 months x shortfall in tax |
| On or before 15th March | 100% | 100% | 1% x 1 month x shortfall in tax |
It is crucial for the taxpayers to note that the due date for the third installment of advance tax was 15 December 2024 and the requisite tax had been paid by them in order to avoid interest consequences u/s 234C of the IT Act.
The Direct Tax Vivad se Vishwas Scheme 2024 has been introduced by the government to resolve prolonged tax disputes. The Scheme offers the taxpayers a chance to settle pending disputes while enabling the government to collect the contested amounts efficiently. The scheme requires payments by the taxpayer in the following manner:
| Sr. No. | Particulars | The amount payable on or before 31 December 2024 | The amount payable on or after 1 January 2025 but on or before the last date |
| 1 | Aggregate amount of disputed tax, interest on such disputed tax and penalty levied or leviable on such disputed tax: | ||
| a) | Appeal filed after 31 January 2020 but on or before 22 July 2024. | 100% of disputed tax | 110% of disputed tax |
| b) | Appeal pending at same forum on or before 31 January 2020 | 110% of disputed tax | 120% of disputed tax |
| 2 | Disputed interest/ penalty/fee: | ||
| a) | Appeal filed after 31 January 2020 but on or before 22 July 2024 | 25% of disputed interest/ penalty/fee | 30% of disputed interest/penalty/fee |
| b) | Appeal/revision petition pending at same forum on or before 31 January 2020. | 30% of disputed interest/ penalty/fee | 35% of disputed interest/penalty/fee |
From the aforementioned, it can be observed that taxpayers applying after December 31, 2024, will face a higher rate of tax payment under this scheme. Thus, in case where the taxpayers intend to settle the pending tax disputes under this scheme, they should apply on or before 31 December, 2024, to avoid paying an additional 10% in tax.
The IT Act provides taxpayers with a variety of deductions designed to offer financial relief. To avail of these deductions, taxpayers must make specific investments, payments, or incur eligible expenses as outlined in the provisions of the IT Act. Importantly, such investments or payments must be completed by March 31, 2024, to qualify for the associated benefits.
With just three months left in the Financial Year 2024-25, this period presents an excellent opportunity for taxpayers to strategize and carry out the required investments or payments, ensuring they maximize their potential deductions and exemptions under the IT Act.
Taxpayers must collect and submit all necessary proofs for tax-saving investments, expenses, and deductions, such as receipts for PPF, ELSS, NSC, and tax-saving FDs; insurance premium receipts for life and health policies; tuition fee receipts for Section 80C claims; and rent payment receipts or rental agreements for HRA claims in case they have opted for the old tax regime. These documents should be provided to the employer to facilitate adjustments in TDS for the remaining months. Failure to do so may result in higher TDS deductions, leading to potential liquidity issues, as refunds for excess TDS can only be claimed when filing the income tax return.