Key Things to Do at the Beginning of the Financial Year 2023

As the financial year 2023 begins, it’s crucial for individuals and businesses to plan their finances and taxes appropriately. Filing taxes can be a tedious and complex process, especially for those who aren’t well-versed in the subject. This is where tax consultants come in handy, providing valuable guidance and support.

The 1st of April is a good time to prepare for the coming financial year. This blog will take you through 10 essential tasks, a checklist of sorts, that each of us needs to go through at the start of any financial year & why VBV & Associates is the best option for Tax Consultancy Services in Kochi, Kerala. These tasks will help you organize your finances better and, if done religiously, will help you achieve your financial goals faster and with a lot less stress. The Union budget, which is announced in February, often comes with a number of changes in the country’s tax laws, such as changes in the income tax slabs.

Mind Your Tax Compliances: The tax debate has gone up to 7.5 lakhs, for HNIs, there has been a reduction in the surcharge, for small businesses and self employed people, the limits on presumptive taxation have been increased, and so on. There have been a number of changes to the tax regime, and understanding and complying with these should be treated as priorities. For example, the old and new tax regimes are important as they will determine your take home salary and tax payments for this financial year. It is important to read up on these changes and their implications on the Internet and be prepared.

Track Your Financial Goals: It is important to track where one stands and the progress they have made on their goals in April. This is due to internal and external factors such as income, expenses, new goals, etc., as well as external factors such as tax slabs, inflation, etc., which can affect one’s take-home salary. Additionally, it is important to review one’s liabilities as well, as income, savings, and interest rates can all change over time. Therefore, it is important to understand one’s goals, where they stand against them, and the changes they need to make to accomplish them.

Appraise Your Loans: An evaluation of one’s loans is important to answer three questions: Will they be able to pay all their loan installments in time? Is there an opportunity to foreclose a loan? Is there an opportunity to reduce installments by negotiating a better rate with the bank? Banks compete with each other, so look out for opportunities to negotiate down the interest rate and use a balance transfer facility to move the loan to someone who can offer a better deal. Additionally, a review of one’s investment portfolio is a big topic in itself, and a review of one’s portfolio is done in the months of February and March.

Review Your Investment Portfolio: Three areas that need to be taken into account when reviewing a portfolio: asset allocation, performance review and rebalancing. Asset allocation is the process of dividing a portfolio across different assets to improve returns and reduce volatility, performance is the task of identifying underperformers and instruments that have better odds of doing well, and rebalancing is the process of bringing a portfolio back-on-track to its original asset allocation. An increment of 20% in income equates to a 20% jump in monthly SIPs.

Increase Your Monthly Investment: If you receive a 20% increase in your monthly take-home salary, you will have an extra 20,000 rupees available with you. This means that if your expenses stay the same, you can now do a 10,000 plus 20,000 i.e. 30,000 rupee monthly SIP. This apportioning of a high amount early in your investing year can really jump up your wealth and it is important to find better ways to do that so that your wealth grows faster. There is an old saying that states that you must pay taxes.

Start Your Tax Planning: Tax planning is an activity that helps taxpayers save money. It involves a combination of products such as an ELSS, investments into NPS, the Public Provident Fund and life and health insurance policies. Tax loss harvesting reduces tax on capital gains, deductions are taken on home loan interest payments, and Section 80E offers tax saving on repayment of an education loan. It is important to understand each provision and start working towards it as early as possible.

Review Your Term and Health Insurance Needs: The start of a financial year is a good time to review one’s term insurance and health insurance policies. This is due to internal factors such as dependents, relocations, and medical inflation. Additionally, insurance is becoming increasingly competitive, with more players, products, and innovations. To find a better deal, it is important to check one’s credit score, as it can be used to compare different policies. This can help to ensure that one is getting the best deal for their needs.

Check Your Credit Score: Checking your credit report regularly is important for two reasons: to identify any inaccurate information that might have crept into it, and to see if the credit score has improved. If it has, it can give you the option of receiving a better loan offer or interest rate from your existing or new loan provider. There are many platforms that offer this service for free, so it should be a part of your calendar.

Make a financial Calendar :  Steps that need to be taken to become financially literate include filing income tax returns, submitting documents to the payroll department, making PPF contributions, renewing health and term insurance policies, and rebalancing investments. These steps will help ensure that you are disciplined and organized with your money and will save you from unnecessary complications in the future. The final focus area for this financial year is to become more financially literate.

Be More Financially Literate: Financial literacy is a basic understanding of six financial matters: budgeting, setting financial goals, saving money, the basics of debt, taxes, and investing. It is important to have an understanding of these six areas, so it is important to read books on personal finance, watch videos, and be intellectually curious. The 10 point checklist of the things each of us should be doing at the start of every financial year includes budgeting, setting financial goals, saving money, the basics of debt, taxes, and investing.

The financial year 2023 requires individuals and businesses to take proactive measures to ensure their finances are in order. Engaging the services of a reliable tax consultant is essential to achieving this goal. VBV & Associates, is the leading chartered accountants in Kochi, Kerala. Our team of experts will guide you through the tax filing process and help you make informed decisions regarding your finances.

Please contact us at vbvassoc@gmail.com or +91 980 901 2123.