Year-End Tax Checklist for March 31: Decide in April, Check in March

Harvesting LTCG, Step by Step

LTCG harvesting is one of the most consistently underused tax planning tools for Indian equity investors. Done correctly before March 31:

Step 1: Identify eligible holdings. You need equity mutual fund or listed equity units held for more than 12 months. Log into your investment platform (Zerodha, Groww, Kuvera or another) and open the capital gains section. Most platforms now split short-term and long-term holdings for each fund.

Step 2: Calculate unrealised LTCG. Look at the long-term holdings and their unrealised gains. The total unrealised LTCG across all long-term equity holdings on all platforms is your working number. If it is below ₹1.25 lakh, you can redeem all of it tax-free.

Step 3: Redeem the eligible amount. Redeem the units with unrealised LTCG below ₹1.25 lakh. On Zerodha Coin: Portfolio → Select fund → Redeem → Enter units. On Groww: Portfolio → Fund → Withdraw → Units/Amount. On Kuvera: Portfolio → Fund → Withdraw.

Step 4: Wait for credit and immediately reinvest. The redemption typically credits in 1–3 business days. As soon as the money arrives, reinvest it in the same fund (or an equivalent fund if the original carries exit loads). This restores your position and resets your cost basis to the current NAV.

The result: your cost basis for those units is now higher by the gain you harvested, up to ₹1.25 lakh. When you eventually sell, you pay LTCG only on gains above the new, higher cost basis. Repeat it every year and you raise your cost basis steadily, reducing future tax year after year.

Important constraints: the LTCG exemption of ₹1.25 lakh applies to your total net LTCG from all equity investments in the financial year, not separately to each fund. Include any equity shares sold during the year. If you have already realised ₹70,000 of LTCG from other equity transactions, you can harvest only ₹55,000 more without triggering tax.

Advance Tax in Five Steps

If you need to pay advance tax and haven't done a detailed calculation, a practical method for the Q4 payment due March 15:

Step 1: Estimate your total income for the financial year. For predictable salaried income: (monthly gross salary × months worked) + any bonus received + rental income + freelance income received.

Step 2: Estimate total capital gains. Pull the capital gains report from your broker (Zerodha's Tax P&L section shows this) and add any capital gains from mutual fund redemptions.

Step 3: Apply deductions. Standard deduction ₹75,000 in the new regime or ₹50,000 in the old regime. In the old regime only: Section 80C up to ₹1.5 lakh, 80D health insurance premium, and 80CCD(1B) NPS contribution up to ₹50,000.

Step 4: Calculate tax on taxable income under your regime, then subtract TDS already deducted by your employer (from Form 16 Part A, or estimated from salary slips).

Step 5: The balance is your advance tax liability. If it is ₹10,000 or more, you must pay it.

Pay through net banking on the income tax portal (incometax.gov.in) under "e-Pay Tax", selecting Advance Tax (100) and the right period. Under the Income-tax Act, 2025 the challan is filed against a tax year, not an assessment year, so advance tax on FY 2026-27 income goes against Tax Year 2026-27; AY 2027-28 is not offered. Only tax on FY 2025-26 and earlier income still goes against an assessment year (AY 2026-27) under the old Act.

Section-by-Section Tax Review for the Full Year

The March 31 deadline applies across several sections. A full review makes sure nothing is missed:

Section 80C (₹1.5 lakh limit):

• EPF contribution (employee side): auto-deducted, so check your salary slip for the annual total
• PPF contributions made during the year: check your PPF passbook
• ELSS investments: check your mutual fund CAS
• LIC and other life insurance premiums paid
• Home loan principal repayment (from your loan statement)
• Children's school tuition fees paid (up to two children)
• NSC, SCSS, 5-year bank FD

Total these and confirm whether the ₹1.5 lakh limit is reached. If not, the gap can be filled with ELSS until March 31.

Section 80D (health insurance premiums):

• Premium paid for self, spouse, and children's health insurance: up to ₹25,000
• Additional premium for parents' health insurance: up to ₹25,000 (or ₹50,000 for senior citizen parents)
• ₹5,000 sub-limit within 80D for preventive health checkups

Section 24(b) (home loan interest):

• Interest paid on home loan during the year: up to ₹2 lakh deduction on self-occupied property
• Get the interest certificate from your bank or housing finance company (typically issued in March)

Section 80CCD(1B) (NPS Tier 1, ₹50,000 additional):

• This is over and above the ₹1.5 lakh 80C limit
• If you haven't made an NPS contribution this year and are in the old regime, this is one of the most valuable deductions available: it adds ₹50,000 to your retirement corpus while reducing taxable income

HRA deduction (if claiming):

• Collect and file rent receipts for the full year
• If annual rent paid exceeds ₹1 lakh (₹8,333/month), your landlord's PAN is required; collect it before March 31 and declare it to your employer

The tax document checklist keeps all of these receipts and certificates in one list.

Why I'd Decide in April and Only Check in March

Every item above has a deadline, and almost every expensive mistake below comes from treating the deadline as the start date. The ELSS order placed on March 31 that confirms on April 1. The harvest redeemed on March 28 that cannot be reinvested in time. The rent receipts nobody can get from a landlord after the year is over.

The bank renewal at our mill gets a head start of 60–90 days for exactly this reason: papers put together calmly come out right, and papers rushed in the final days are where the errors hide. Tax works the same way. The way I'd do it: sit down in April, put the year's expected income into the calculator under both regimes, pick one, and write down the plan: which deductions, from which instruments, on which dates. February would be for proofs, early March for any top-up, and March 31 would be an ordinary day.

The other thing I would insist on is that the plan starts from the numbers, not from a product. ELSS, PPF, NPS and insurance premiums are ways to fill a gap you have calculated. Buying one in the last week of March because it saves tax, without knowing whether you needed it or whether you are even in the old regime, is the decision made backwards.

What Happens on April 1

At midnight on March 31, the following reset:

• The 80C ₹1.5 lakh limit resets to zero for the new financial year
• The ₹1.25 lakh LTCG annual exemption resets
• The financial year changes from FY 2026-27 to FY 2027-28
• All investments and transactions from April 1 onwards belong to the new financial year

In the first days of April:

• Contribute to PPF for the new year before the 5th to earn the most interest (see the PPF guide for why April 5 matters)
• Set up your tax plan for the new year and confirm your Section 80C contribution schedule (SIPs, LIC, EPF)
• Update your employer's TDS declaration with the deductions planned for the new year, so TDS is right from the first salary of the new financial year

Year-End Mistakes and How to Avoid Them

Leaving the 80C gap unfilled until the last two days of March. Investment platforms carry extremely high load on March 29, 30 and 31, and ELSS NAV allocation can slip by a business day if servers are overloaded. If you invest on March 31 and the order confirmation is delayed to April 1, the investment counts for the new financial year, and your 80C claim is gone. Complete ELSS investments by March 25 to avoid this entirely.

Harvesting LTCG too close to March 31. Equity fund redemptions typically take 2–3 business days to credit, plus another 1–2 business days to reinvest in the same fund. Redeem on March 28 and the reinvestment may not process in time. Plan for all LTCG harvesting to be complete by March 20–22, with the redemption order placed early enough for the reinvestment to fall in the same financial year.

Confusing TDS with advance tax. TDS is deducted at source: your employer deducts it from salary, your bank on FD interest. Advance tax is what you pay yourself on income with no TDS (freelance income, capital gains, rental income). Both are taxes paid during the year and both reduce your final ITR liability. The common mistake: assuming TDS deducted on salary is sufficient when you also have freelance income or significant capital gains that weren't TDS-covered, and getting an interest notice under Section 234B months later.

Not collecting rent receipts before March 31 for HRA. If you claim HRA and pay rent above ₹8,333/month (₹1 lakh a year), you need rent receipts from your landlord. For proof submission to your employer (January–February), receipts for April to March of the financial year are needed. Collecting them after March 31 for the previous year is difficult and sometimes impossible, so ask your landlord for signed receipts monthly or at least quarterly.

Not checking Form 26AS and AIS for discrepancies before filing. The Annual Information Statement (AIS) on incometax.gov.in shows every financial transaction reported to the tax department: bank interest credited, dividends, property registrations, high-value cash transactions. If your ITR doesn't account for income reported in AIS, the system matches it automatically and may flag a discrepancy that needs a response. Check AIS and Form 26AS before filing, not after; Form 16 vs AIS vs Form 26AS shows how to match them.

Do the thinking in April, the proofs in February and the checking in March. Then March 31 is just a date, and the only thing left on it is making sure the plan you wrote down actually happened.