Making March Meaningful: Smart Moves to Save Big Before the Deadline
March is when businesses and taxpayers scramble to get their finances in order—like students cramming before exams! The tax laws undergo changes every year, and keeping up with them is crucial to avoid unnecessary tax burdens (or worse, penalties that make your wallet cry). So, as part of our annual feature, let’s look at key tax precautions that can save you from last-minute panic and can minimize tax liabilities. With a few smart moves, you can avoid unnecessary tax burdens and even save money before the deadline.
1. MSME Payments – Pay Up or Pay the Price!
The 31st March 2025 deadline is crucial under Section 43B(h), which requires payments to MSMEs within a stipulated period of 15 or 45 days. Introduced last year, this is now the 2ndyear of its enforcement.
b) If any business entity has made purchase of any goods/services from a Micro or Small enterprise and the payment for such purchases or services has not been made during the year and it is outstanding as on 31st March (except where such outstanding payments as on 31st March are falling within the period of 15 days or 45 days after 31st March and payment of the same is made in the subsequent period within the appointed date of 15 days or 45 days), the same will not be allowed as a deduction while computing business income.
c) Non-Compliance with section 43B(h) would impose heavy tax costs on the business houses. Every business may review the status of creditors and their payment before 31st March or within due date subsequently so as to avoid unnecessary tax burden. Even if the payment is done after 31st March but before the filing of the income tax return, it would not be available as deduction if it not in accordance with the timeline mentioned hereinabove.
Bottom line: If you have pending payments to MSMEs as of 31st March (beyond the prescribed period), they will not be allowed as deductions.
Clear your dues before 31st March or prepare for a tax hit that hurts more than a surprise pop quiz!
2. Choosing the Right Tax Regime – Old vs. New:
a) Now, the New Tax Regime (NTR) is the default tax regime. For the majority of the taxpayers, the new Taxpayers may do the calculation & check if the Old Tax Regime (OTR) with benefit of deduction and exemption is still better or the NTR without such benefit is better.
b) Taxpayers may note that the tax rebate limit under section 87A now is Rs. 7 lakh for the FY 2024-25 if the person is opting for the NTR. The enhanced tax rebate limit would mean that the person whose income is not exceeding Rs. 7 Lakh need not invest anything in order to claim exemptions and the entire income would be tax-free irrespective of the investment by such an individual. However, the amount of Rs. 7 Lakh doesn’t include the amount of capital gain as such.
c) Salaried taxpayers can now claim a higher standard deduction of Rs. 75,000/- (up from Rs. 50,000 last year).
d) The investment and deduction may be planned before 31stMarch by choosing the right & suitable tax regime for each individual taxpayer.
3. Advance Tax – The Early Bird Saves the Interest!
Taxpayers have to pay the tax in advance in four installments i.e., on or before 15th June (15%), 15thSept (45%), 15th Dec (75%) & 15th March (100%). Though minor variation is allowed, still taxpayers have to ensure the payment of tax by 15th March itself. At present, the interest charged by the income tax department is very high as compared to alternative cost of funds. Taxpayers may estimate the tax liability and may compensate for the shortfall in the payment of tax in the last installment of advance tax which is due on 15/03/2025.
If you missed it or underestimated your income, you can still make a catch-up payment before 31st March to avoid interest under Section 234B.
Don’t forget to factor in the impact of surcharge while estimating your tax. Trust, paying tax in advance is far better than dealing with interest rates that feel like highway robbery!
4. Annual Information Statement (AIS) – The Government is Watching!
Think of AIS like a social media stalker—it knows almost everything about your financial transactions! Download and review your present AIS and Form 26AS to verify reported income, TDS, and high-value transactions. If there are mismatches, don’t wait for the tax department to point them out—get them corrected with the deductor before filing your return. (It may be noted that the final updates in the AIS would normally by the first week of June only but still some transactions as of now would be the part of the AIS).
5. Big Purchases Before March 31? Make Them Work for You!
Thinking of buying a car, machinery, or office equipment? Timing is everything! If your business has had a fantastic year, investing before 31st March can help reduce taxable profits via depreciation benefits. However, new businesses should plan wisely—once you put an asset to use, depreciation is mandatory, not optional. So, should you prepone or postpone? Let your financial position guide your decision!
6. Loan Accounts – Clean Up Before the Taxman Comes Knocking
Nobody likes explaining unnecessary financial clutter to tax officers.
One issue which is often a matter of unnecessary addition, explanation & litigation during the course of income tax proceedings is unwanted debit and credit balances in the books of accounts.
Unwanted debit and credit balances in loan accounts often issue in the tax scrutiny resulting in unnecessary disallowances, additions, and litigation.
If a loan or credit isn’t really payable or receivable, square it off before 31st March to keep your books clean and compliant.
7. Tax Loss Harvesting – Turn Losses into Gains!
The stock market has had its ups and downs, but there’s a silver lining for tax planning.
a) If you’ve made Long-Term or Short – Term capital gains (LTCG/STCG) on shares, consider selling loss-making shares to offset gains and reduce tax liability. It may be noted that LTC Loss can be set off against LTCG only.
b) Since LTCG up to Rs. 1.25 lakh is tax-free, strategic selling can ensure you stay within this limit and enjoy the tax free income to the tune of Rs. 1.25 Lakh every year in every income tax file.
For instance, if you made a ₹3 lakh LTCG but have a ₹ 5 Lakh unrealized loss in shares, selling few shares before March 31 so that you have a net taxable gain of ₹ 1.25 lakh can be part of smart tax planning. A pro-tip? If you still believe in the stocks, buy the shares sold the next day!
8. Timing is Everything – Smart Moves for Your Income & Expenses!
Some expenses and incomes can be preponed or postponed to legally optimize tax impact.Reviewing financials before 31st March ensures better tax efficiency.
9. March’s Other Must-Do’s!
March isn’t just about taxes—it’s about compliance too! Here’s your quick checklist:
Inventory Check: Ensure to take stock counts & maintain proper records, not only for business control but also for taxation purpose.
TDS Compliance: Cross-check if TDS has been done properly, wherever applicable.
Carry Forward Losses: If losses from earlier years are about to expire, book some profits if possible.
Bank Financial Ratios: Ensure your balance sheet is optimized for better ratings and interest rates.
GST Decisions: Evaluate whether to continue with the regular GST scheme or switch to composition.
Dividend Planning: If you run a company, decide if dividend distribution before year-end is beneficial?.
Final Thought – March Madness, But Make It Tax-Smart!
Yes, this column is a yearly feature, but so is your birthday—and you never complain about that, right? While the pointers remain similar, their application evolves with changing tax laws and financial situations.
Time is ticking! Act now, optimize saving, and step into the new financial year stress-free. Grab your papers & make this March meaningful. The taxman won’t wait—but with smart planning, you can make sure he takes as little as legally allowed! A comprehensive review of the aforementioned points will not only optimize tax impact but also facilitate earlier finalization of books and filing of income tax returns.
[Views expressed are the personal view of the author. Readers are advised to seek professional advice before taking any decisions. Readers may forward their feedback & queries at nareshjakhotia@gmail.com. Other articles & response to queries are available at www.theTAXtalk.com]
