Key Income Tax Deadlines to Meet Before March 31, 2025: Avoid Penalties and Maximize Tax Savings

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As the financial year 2024-25 comes to an end, taxpayers must complete several critical income tax-related tasks before March 31, 2025. Failing to meet these deadlines can result in penalties, interest charges, or disallowance of deductions, leading to unnecessary financial burdens. To help individuals and businesses stay compliant, here’s a comprehensive guide on the key tax obligations to fulfill before the deadline.

1. Payment of Balance Advance Income Tax to Avoid Interest Under Section 234B

Every taxpayer, including individuals and businesses, must ensure that their advance tax obligations for FY 2024-25 are fully paid before March 31, 2025. Advance tax applies to those whose total tax liability exceeds ₹10,000 in a financial year.

Failure to pay or underpay the required advance tax by this date may lead to interest penalties under Section 234B of the Income Tax Act. This section imposes 1% per month interest on any unpaid advance tax from April 1, 2025, until the date of actual payment. To avoid this extra cost, taxpayers should review their tax liability and make the necessary balance advance tax payment before the deadline.

2. Make Tax-Saving Investments Under the Old Regime for FY 2024-25

For taxpayers opting for the old tax regime, March 31, 2025, is the last date to make tax-saving investments to claim deductions for FY 2024-25. Some of the most common investments and expenses eligible for tax deductions include:

• Public Provident Fund (PPF) – Deduction under Section 80C (Up to ₹1.5 lakh)
• Life Insurance Premium – Deduction under Section 80C
• National Savings Certificate (NSC) – Deduction under Section 80C
• Tax-Saving Fixed Deposits (FDs) – Deduction under Section 80C (5-year lock-in period)
• Equity Linked Savings Scheme (ELSS) – Deduction under Section 80C
• Employees’ Provident Fund (EPF) Contributions
• Sukanya Samriddhi Yojana (SSY) for a girl child

Those following the new tax regime under the Income Tax Act, 1961, do not need to make these investments as deductions are not applicable. However, if you’re sticking to the old regime, ensure all contributions and payments are made before March 31, 2025, to maximize tax benefits.

3. Pay Outstanding Dues to Micro and Small Enterprises to Avoid Disallowance Under Section 43B

Businesses that deal with Micro and Small Enterprises (MSEs) must clear their outstanding dues related to FY 2024-25 before March 31, 2025 to avoid disallowance under Section 43B(h) of the Income Tax Act.

Previously, businesses were allowed to claim expenses related to unpaid dues to MSEs if the payment was made before the due date of filing the Income Tax Return (ITR). However, with the recent amendment, there is no relaxation—the dues must be cleared within the same financial year to be allowed as an expense.

If payments are not made within the stipulated time, these expenses will be disallowed, leading to a higher taxable income and increased tax liability. To avoid this, businesses should prioritize settling payments to their MSE vendors before the end of March.

4. File Updated ITR for AY 2022-23 with 50% Additional Tax and Interest

The Income Tax Department allows taxpayers to update their Income Tax Returns (ITRs) for Assessment Year (AY) 2022-23 (corresponding to FY 2021-22) if they failed to report income earlier or need to correct any discrepancies.

However, filing an Updated ITR (ITR-U) for AY 2022-23 comes with an additional tax burden. Taxpayers must pay an extra 50% of the aggregate tax and interest liability while filing the updated return. This penalty is imposed to encourage timely compliance and deter taxpayers from underreporting their income.

If you need to revise your ITR for AY 2022-23, ensure you do so before March 31, 2025, to avoid further penalties or legal scrutiny.

5. File Updated ITR for AY 2023-24 with 25% Additional Tax and Interest

Similarly, taxpayers who need to file an Updated ITR for Assessment Year (AY) 2023-24 (relating to FY 2022-23) must do so by March 31, 2025. However, unlike AY 2022-23, the penalty for late filing is lower—taxpayers are required to pay an additional 25% of the aggregate tax and interest liability.

Filing an Updated ITR can be beneficial in cases where taxpayers have missed reporting income, claimed incorrect deductions, or made calculation errors in their previously filed returns. Filing voluntarily before tax authorities issue a notice can prevent legal complications.

Final Thoughts: Stay Compliant and Avoid Unnecessary Penalties

As the March 31, 2025 deadline approaches, taxpayers must take proactive steps to meet their tax obligations and avoid penalties. Here’s a quick checklist to ensure compliance:

✔ Pay any remaining advance tax to prevent interest under Section 234B.
✔ Make tax-saving investments under the old regime (PPF, insurance, NSC, ELSS, etc.).
✔ Clear all outstanding dues to Micro and Small Enterprises to avoid disallowance under Section 43B.
✔ File Updated ITR for AY 2022-23 with an additional 50% tax and interest if applicable.
✔ File Updated ITR for AY 2023-24 with an additional 25% tax and interest if necessary.

With only a few days left in the financial year, timely tax planning and compliance can help taxpayers maximize savings, avoid unnecessary penalties, and ensure smooth financial operations. Taking action before March 31, 2025, will not only keep you on the right side of the law but also contribute to better financial planning for the year ahead.