4 Financial Opportunities To Grab Before 31st March

As the financial year draws to a close, here are four tasks you should complete over the next few days.

1. Book profits in stocks and equity funds

Long-term capital gains from stocks and equity-oriented funds beyond Rs 1 lakh in a year are now taxable. If you have made long-term capital gains, it is time to book profits in a way that you utilise the Rs 1 lakh tax-free threshold. Sell your stocks and equity funds this week to book a profit of up to Rs 1 lakh and then buy them back in the next financial year. 

This simple strategy will reset your buying price upwards and thereby reduce your tax liability when you eventually sell them. But this will entail a small 1% cost for stock investors by way of brokerage paid on the sale and purchase transactions. For mutual fund investors there will be no costs because entry loads have been removed and exit loads don’t apply if funds are sold after a year. 

2. File belated tax returns

The final deadline to file tax returns for 2017-18 expires this week. If you still haven’t filed your tax return, do it now. You might have to pay a late fee because of changes introduced in last year’s Budget. 

3. Lock into 3-year FMPs

Fixed maturity plans (FMPs) of mutual funds are closed-ended debt schemes with a fixed maturity date. Like in the case of debt funds, gains from FMPs held for more than three years are treated as long-term capital gains and taxed at a lower rate of 20% after indexation. The indexation benefit is enhanced if the holding period runs across more than three financial years. 

4. Finish your tax planning

Some taxpayers might not have been able to complete their tax planning for the year. If you are among them, don’t panic. You have very little time to study investment options in detail. So don’t go for insurance policies and other investments that require a multi-year commitment. Don’t also invest a large sum in equity-linked options such as mutual funds and Ulips at one go. Such investments are best made through monthly SIPs.