Filing Your ITR? 4 Tax Planning Mistakes to Avoid in March

Summary: 

• Choose the appropriate tax regime by February or early March after proper comparison. 

• Avoid last-minute investments in tax-saving products in the month of March. 

• Review salary details, TDS, and Form 16 mismatches before payroll is finalised in March. 

• Include all non-salary sources while estimating your total income and paying advance tax on time. 

• Use the airpay money app for free tax planning and receive suggestions to reduce your tax liability. 

March marks the end of the financial year, and this is when many taxpayers begin last-minute tax planning and management.  

Such rushed decisions usually lead to missing deductions, selecting unsuitable tax-saving products, or choosing the wrong tax regime. 

The impact? T

These mistakes can result in incorrect tax payments and may trigger income tax notices or scrutiny. 

Don’t want that? 

Below are four common tax planning mistakes you should avoid in March. 

1. Delays in Choosing the Tax Regime 

Usually, at the start of the new financial year, most employers ask for a “tax regime declaration”. They want you to confirm whether you will follow the old or the new tax regime for that financial year.  

This choice allows them to calculate how much TDS (tax deducted at source) to deduct from your monthly salary.  

However, many taxpayers postpone this decision until late March, and the last-minute rush usually results in an incorrect choice.  

So, what can you do instead?  

In the last week of February or early March, try to identify which tax regime results in a lower income tax liability for you.  

But how? 

To avoid manual calculations, you can use the free tax calculator provided by airpay money. It is updated as per the latest budget and instantly calculates your income tax liability under both the old and new regimes. Moreover, the calculator also suggests ways to reduce your tax.  

2. Treating Tax-Saving as a “March-Only” Activity 

If you are filing your ITR under the old regime, there are several tax-saving investments you can make u/s 80C. Some common options are ELSS, PPF, life insurance premiums, and principal repayment on a home loan. 

However, many taxpayers leave these decisions until late March. In the last-minute rush, they are usually: 

• Buy whatever policy a banker or agent is promoting 

• Invest in ELSS or ULIPs without proper evaluation, or 

• Make large PPF deposits without considering liquidity needs 

Realise that such tax planning decisions are due to “urgency” rather than “suitability”. 

So, what’s the right approach? 

Try to spread investments across the year instead of putting a large amount in March. For this purpose, you can even start an SIP in ELSS or other eligible instruments.  

3. Ignoring Salary Details, TDS, and Form 16 Mismatches 

Usually, in March, your employer: 

• Closes the payroll and 

• Calculates your final tax liability 

If you do not check your salary details, TDS, and investment proofs before this stage, any mistakes (such as missing deductions or incorrect tax calculations) cannot be corrected in time. As a result, you may end up with excess tax deducted or must pay a higher income tax. 

So, what to do? 

Check for all the mismatches and submit accurate investment proofs on time in the month of March. Ensure all deductions are properly declared (along with documentary proofs) before payroll is closed. Also, try to verify your TDS deductions monthly or quarterly as follows: 

4. Underestimating Income and Ignoring Advance Tax 

Many taxpayers with income beyond salary (such as freelancers, consultants, landlords, and traders) usually underestimate their total income and delay advance tax payments.

As per Section 208, Income Tax Act, an assessee is liable to pay advance tax if the total tax payable exceeds ₹10,000 after adjusting TDS/ TCS. Generally, advance tax is payable in four installments: 

• 15% by 15 June 

• 45% by 15 September 

• 75% by 15 December, and  

• 100% by 15 March 

However, assessees opting for presumptive taxation are required to pay 100% of advance tax by 15 March, and resident senior citizens without business income are exempt from advance tax. 

So, what’s the mistake here? 

Many taxpayers realise only in March that their total income is higher than expected. To correct this, they make a large lump-sum tax payment at the end.  

Many taxpayers realise only in March that their total income is higher than expected and therefore make a lump‑sum tax payment at the end of the year. While this may help avoid interest under Section 234B if at least 90% of the total tax is paid by 31 March, it does not eliminate interest under Section 234C, which is levied for failure to pay advance tax instalments on the respective due dates.  

To avoid such interest, taxpayers should estimate their income periodically and pay advance tax as per the prescribed instalment schedule. 

Conclusion 

So now you know the several mistakes most taxpayers make in March. Such mistakes usually lead to a higher income tax liability or underreporting income. Most of these errors arise from delayed decisions, poor tracking of income, and last-minute tax planning.  

To avoid such mistakes, you may: 

• Choose the correct tax regime after proper comparison in early March 

• Track TDS (monthly or quarterly) through payslips and Form 26AS 

• Try to invest in tax-saving products throughout the year 

• Pay advance tax instalments on time 

• Maintain proper records and supporting documents 

Want to do tax management online? 

Download the airpay money app today and get free tax planning suggestions on how to reduce your taxes. We are a 360-degree financial wellness platform trusted by 1,00,000+ users.