By IPPC GROUP Group (I.P. Pasricha & Co) | Chartered Accountants | Member firm of Russell Bedford International | March 2026
Financial Year End FAQs 2026 India: Every year, the weeks leading up to March 31 bring a flood of questions from business owners, directors, and salaried professionals. What still needs to be done? What happens if I miss a deadline? Which tax regime should I choose? We have compiled the questions our clients ask most frequently at year-end – answered clearly, with the practical detail that actually helps you make the right decision in the time you have left.
Frequently Asked Questions – Financial Year End 2025–26
| Q1. What financial tasks must be completed before 31 March? |
March 31 is not just a calendar date – it is the legal closing of the financial year, and several tasks must be done on or before this day without exception.
On the tax-saving side, you must complete investments under Section 80C (PPF, ELSS, LIC, NSC, home loan principal), Section 80D (health insurance), and NPS contributions. These deductions apply only to the year in which the investment is actually made. Submit all investment proofs to your employer before the end of March so that your March salary TDS is correctly calculated.
On the compliance side: pay any outstanding advance tax, deposit all pending TDS amounts, file any pending GST returns for the year, reconcile your Form 26AS and AIS data with your books, and make a final decision on your tax regime for the year. If your business has outstanding vendor payments that qualify under Section 43B – professional fees, loan interest, employee bonuses – those must also be paid before March 31 to be deductible this year.
Waiting until April for any of these means you either lose the deduction entirely or start paying interest on what you owe.
ℹ️ IPPC GROUP Note: If you are not sure which of these apply to your specific business structure, reach out to us. A single call before March 31 can save you a significant amount in avoidable tax or penalties.
| Q2. What happens if tax-saving investments are not made before 31 March? |
The loss is permanent. There is no mechanism under Indian income tax law to carry forward missed deductions under Section 80C, 80D, or similar provisions. If you do not invest before March 31, the deduction for that financial year simply does not exist.
To put this in concrete terms: if you have not used your full Rs. 1.5 lakh 80C limit this year and you invest on April 1 instead, that investment counts for FY 2026–27 – not FY 2025–26. You will pay tax on Rs. 1.5 lakh of additional income at your applicable slab rate for this year. At 30%, that is Rs. 45,000 in additional tax that could have been avoided with a timely investment.
This is especially important in FY 2025–26 because the new Income Tax Act 2025 comes into force from April 1, 2026. Under the new default regime, most 80C deductions will no longer apply unless you specifically opt out. This makes FY 2025–26 the last year where these deductions deliver full value automatically.
ℹ️ IPPC GROUP Note: If you have unused 80C capacity and are unsure where to invest at this stage, ELSS mutual funds are one of the fastest options – the investment can be completed online in minutes and qualifies immediately for this year’s deduction.
| Q3. Is 31 March the absolute last date for tax-saving investments? |
Yes, without exception. The Income Tax Act defines a financial year as April 1 to March 31. Any investment or payment made on April 1 or later belongs to the next financial year – FY 2026–27 – regardless of how small the gap is.
One common misconception is that because the ITR filing deadline is July or later, there is additional time to make investments. This is incorrect. The deadline for the investment itself is March 31. The ITR deadline only relates to when you report and file – not when the qualifying transactions must occur.
A practical warning: on March 31, banking systems, mutual fund platforms, and payment portals experience very high volumes. Transactions initiated on March 31 may not reflect until the next working day due to settlement cycles, particularly for NEFT transfers and certain fund investments. If you are making last-minute investments, do so by March 28 or 29 to be safe.
ℹ️ IPPC GROUP Note: We see this situation every year – a client initiates an investment on March 31 evening and the unit allotment date shows April 1. The deduction is then lost for that year. Do not leave it to the last day.
| Q4. What happens if advance tax is not paid on time? |
Two interest provisions apply automatically when advance tax is missed or underpaid:
Section 234B applies when less than 90% of your total tax liability for the year is paid by March 31. Interest is charged at 1% per month on the shortfall, calculated from April 1 until the date of actual payment. This continues to accrue every month.
Section 234C applies to shortfalls in the quarterly instalments during the year (due in June, September, December, and March). Interest is charged at 1% per month for each quarter where the instalment was insufficient.
These are not small amounts. On a tax liability of Rs. 5 lakh, a single month of Section 234B interest is Rs. 5,000. If you are filing your ITR in September, that is six months of interest – Rs. 30,000 – purely because advance tax was not paid on time. The interest is non-negotiable and is calculated automatically by the system when you file.
Professionals, consultants, freelancers, and business owners with income not subject to TDS are most at risk here, as no TDS is deducted at source on their income.
ℹ️ IPPC GROUP Note: If you are unsure of your advance tax liability or whether you have paid the right amounts, we can run a quick calculation for your specific income profile. It is better to top up now than to pay months of interest later.
| Q5. Why is checking AIS and Form 26AS important before 31 March? |
The Annual Information Statement (AIS) and Form 26AS are the Income Tax Department’s view of your financial activity for the year. They contain TDS credits, interest income, dividends, capital gains, GST-reported turnover, property transactions, and high-value purchases – all sourced directly from banks, brokers, registrars, and other institutions.
When you file your ITR, the department cross-matches it against AIS data automatically. If there is a discrepancy – say, your bank reported Rs. 1.2 lakh in interest income but you declared Rs. 80,000 – the system flags it and a notice under Section 143(2) or 148A can follow.
Checking before March 31 gives you time to investigate discrepancies while the transactions are recent. You may find TDS that has been deducted by a client but not yet reflected, or income attributed to you that belongs to someone else with a similar PAN. These corrections are easier to trace and resolve now than after the year closes.
It also helps with tax planning: you may discover income sources you had not accounted for, which affect your advance tax calculation or your regime decision.
ℹ️ IPPC GROUP Note: Log in to the Income Tax portal at incometax.gov.in and download your AIS under the ‘Annual Information Statement’ tab. Compare it line by line against your books. Flag anything that does not match and bring it to us – we will help you determine whether a correction is needed or whether the entry is explained by your records.
| Q6. Should the old or new tax regime be chosen before 31 March? |
Yes – and this decision carries more weight in FY 2025–26 than in any previous year, because the new Income Tax Act 2025 makes the new regime the default from April 1, 2026.
The core trade-off is this: the old regime allows a wide range of deductions (80C, 80D, HRA, home loan interest, NPS, standard deduction for salary, and more) at higher slab rates. The new regime offers lower slab rates but removes most of these deductions. Which one is better depends entirely on how much you can actually claim in deductions.
As a general guide: if your total eligible deductions exceed Rs. 3.75 lakh (for salaried individuals), the old regime often saves more tax. Below that threshold, the new regime’s lower rates tend to win. For business owners, the calculation is different because all legitimate business expenses remain deductible under both regimes – the difference lies in personal investment deductions.
For salaried employees, informing your employer of the chosen regime before March salary processing is essential. Your employer will deduct TDS for March based on the regime you declare. If you do not inform them, they will default to whichever regime they applied throughout the year.
Once you file your ITR for the year, the regime decision is locked for that assessment year.
ℹ️ IPPC GROUP Note: This is one of the most impactful decisions of the year and it should not be made on a general rule. We recommend a quick calculation with actual numbers. Contact us at IPPC GROUP Group and we will run the comparison for your specific income and deduction profile.
| Q7. Old tax regime vs new tax regime – a detailed breakdown with real numbers. Which actually saves more tax? |
The question of which regime wins cannot be answered in one line – it depends on your income level, your actual deductions, and whether your income is from salary or business. Here is a complete breakdown across all these angles so you can make an informed decision.
WHAT DEDUCTIONS YOU LOSE UNDER THE NEW REGIME
Switching to the new regime means giving up: Section 80C up to Rs. 1.5 lakh (PPF, ELSS, LIC, NSC, home loan principal repayment); Section 80D health insurance premiums up to Rs. 25,000 (Rs. 50,000 if parents are senior citizens); HRA exemption on rent paid; home loan interest under Section 24(b) up to Rs. 2 lakh per year; additional NPS contribution under Section 80CCD(1B) up to Rs. 50,000; and Leave Travel Allowance. The standard deduction of Rs. 75,000 for salaried individuals remains available under both regimes.
FOR SALARIED INDIVIDUALS AND DIRECTORS ON PAYROLL
Consider someone earning Rs. 15 lakh annually with the following deductions: Rs. 1.5 lakh in 80C investments, Rs. 25,000 in health insurance (80D), Rs. 1.2 lakh in HRA, and Rs. 2 lakh in home loan interest. Total deductions including the standard deduction come to approximately Rs. 5.7 lakh.
Under the old regime: taxable income of Rs. 9.3 lakh, approximate tax liability of Rs. 1.09 lakh.
Under the new regime: taxable income of Rs. 14.25 lakh (only standard deduction applied), approximate tax liability of Rs. 1.73 lakh.
In this case, the old regime saves approximately Rs. 64,000. However, reduce those deductions significantly – say someone with only the standard deduction and Rs. 50,000 in 80C – and the new regime’s lower slab rates will often produce a lower tax bill.
The tipping point for most salaried individuals is roughly Rs. 3.75 lakh in total deductions. Above that, the old regime tends to win. Below it, the new regime does.
FOR BUSINESS OWNERS AND SELF-EMPLOYED PROFESSIONALS
The calculation is fundamentally different for business income. Under both old and new regimes, all legitimate business expenses – employee salaries, office rent, depreciation, loan interest on business loans, professional fees, travel, utilities – are deductible as business expenses. These are not affected by the regime choice at all.
The regime difference for business owners is only in personal investment deductions: 80C, 80D, HRA, home loan interest on residential property, NPS. A business owner who has significant personal investments and a home loan can still benefit from the old regime. A business owner with minimal personal deductions may find the new regime simpler with no practical difference in outcome.
HOW TO COMPARE THE TWO FOR YOUR SITUATION
Step 1: Add up every deduction you have actually made this year – 80C investments, health insurance premiums, HRA eligible amount, home loan interest certificate, NPS contributions.
Step 2: Subtract all deductions from your gross income and calculate tax using old regime slab rates.
Step 3: Subtract only the standard deduction (for salary) or business expenses (for business income) from your gross income and calculate tax using new regime slab rates.
Step 4: The lower figure is your better regime. The difference between the two is the actual money at stake.
Do this calculation before March salary processing if you are salaried, so your employer deducts the right TDS in the final month.
ℹ️ IPPC GROUP Note: We run this comparison regularly for clients and the savings identified are often between Rs. 30,000 and Rs. 1.5 lakh depending on income level and deduction profile. If you would like us to run the numbers for your specific situation before you file, reach out at sailfreely(Replace this parenthesis with the @ sign)capasricha.com or visit www.ippcgroup.com. It takes under 30 minutes and the decision cannot be changed after ITR filing.
| Q8. Can tax planning be done after 31 March? |
For the current financial year – no. Any investment, payment, or financial decision that needs to be counted within FY 2025–26 must be completed before March 31. The financial year closes at midnight on March 31 and there are no extensions, grace periods, or retrospective adjustments.
What can be done after March 31 is the filing of your ITR, which has its own separate deadline (typically July 31 for non-audit cases). But filing is just reporting what happened during the year – it does not allow you to add investments or payments that were not made.
What you can start after March 31 is planning for FY 2026–27. This is actually the ideal time to plan – you know your income, your tax liability, and what deductions worked and which did not. Setting up your advance tax schedule for Q1 (due June 15), deciding your tax regime for the new year, and restructuring your salary if beneficial are all tasks that make sense to do in April rather than leaving them for next March.
ℹ️ IPPC GROUP Note: Most of the tax pain businesses feel in March is caused by doing in four days what should have been spread across twelve months. We encourage clients to schedule a post-April planning session with us so that FY 2026–27 is managed proactively, not reactively.
| Q9. What are the key GST compliance tasks before 31 March? |
GST has several year-end obligations that are separate from income tax and are often overlooked until it is too late.
First, all monthly returns – GSTR-1 and GSTR-3B – from April 2025 through February 2026 must be filed without gaps. A single unfiled return blocks Input Tax Credit for that month, and ITC once lost cannot be reclaimed after the September 2026 return window closes. The GSTR-3B for February 2026 is due by March 20.
Second, run a GSTR-2B reconciliation. Every purchase invoice you claimed ITC on must appear in your supplier’s GSTR-1 and therefore in your GSTR-2B. Mismatches between your books and GSTR-2B are one of the most common triggers for GST scrutiny notices.
Third, verify your GST registration details – registered address, authorised signatory, and bank account. Notices and refunds go to the address on file. If it is outdated, you may have already missed communications.
Fourth, if your turnover crossed Rs. 40 lakh (or Rs. 20 lakh for services) during FY 2025–26 and you are not yet registered, you are in default. Retrospective registration is possible but comes with interest and penalties. Register now.
ℹ️ IPPC GROUP Note: GSTR-9, the annual GST return, is mandatory for businesses above Rs. 2 crore turnover and due by December 31, 2026. However, preparing it in March while your data is fresh saves significant effort later. We recommend beginning the reconciliation now.
| Q10. What TDS obligations must be cleared before 31 March? |
TDS – Tax Deducted at Source – is an area where many businesses carry hidden liability without realising it.
If you have made payments during the year that required TDS deduction – salaries, professional fees, rent above Rs. 50,000 per month, contractor payments – and you either did not deduct or deducted but did not deposit, the consequences are significant. Non-deduction makes you personally liable for the entire TDS amount plus 1% interest per month. Late deposit (deducted but not deposited) attracts 1.5% per month from the date of deduction.
Before March 31, check every month from April 2025 onwards: was TDS deducted? Was it deposited on time? Any gaps must be closed with the deposit and interest before the year ends. TDS for March salaries and payments must be deposited by April 7.
Also check your quarterly TDS returns. Q3 (October–December 2025) was due January 31, 2026. If it is pending, Section 234E charges Rs. 200 per day from the due date. File it immediately.
ℹ️ IPPC GROUP Note: The Income Tax Department’s AIS system now automatically captures all TDS transactions. There is no longer any realistic chance that a gap in deduction or deposit goes unnoticed. Proactive compliance is the only safe approach.
| Q11. Does the new Income Tax Act 2025 affect what I need to do before 31 March 2026? |
Yes, significantly. The new Income Tax Act 2025 comes into force on April 1, 2026, and changes the default tax structure for all taxpayers from that date.
The most immediate impact is on deductions. Under the new default regime, most of the commonly used deductions – Section 80C (PPF, ELSS, LIC), HRA, home loan interest deduction under Section 24(b), 80D for health insurance, NPS deduction under 80CCD(1B) – will not automatically apply. To continue claiming them, taxpayers will need to opt out of the new regime each year at the time of filing.
This makes FY 2025–26 the final year where these deductions apply under the current framework without any additional action. If you have not maximised your 80C limit, made your NPS contribution, or claimed your home loan interest this year, March 31 is the last date to do so under the existing rules.
For businesses, the new act also brings changes to presumptive taxation thresholds, depreciation treatment, and certain disallowances. The specifics vary by business type. It is worth reviewing your structure before April 1 to understand how the new act affects your tax position from FY 2026–27 onwards.
ℹ️ IPPC GROUP Note: The transition to the new tax act is one of the more significant changes in Indian income tax in recent years. We are advising all clients to schedule a review session in April to understand the implications for their specific situation – both for FY 2025–26 compliance and for FY 2026–27 planning.
| Q12. What should directors and private limited company owners specifically check before 31 March? |
Directors and Pvt Ltd company owners have compliance obligations that go beyond personal income tax.
On the ROC side: if the AGM for FY 2024–25 has not been held yet, it must happen before September 30, 2026. The groundwork for that AGM – audited financial statements, directors’ report, auditor’s reappointment – should begin now. Starting in March gives your auditor adequate time; starting in August does not.
Director KYC (DIR-3 KYC) must be filed annually for every director holding a DIN. Non-compliance results in DIN deactivation and a Rs. 5,000 per director penalty. A deactivated DIN means you cannot sign board resolutions, MCA forms, or any official company documents until it is restored – which can delay critical filings.
On the tax side, directors drawing salary from their company should check whether TDS has been correctly deducted throughout the year, ensure their personal investments are recorded for Form 16 purposes, and confirm their chosen tax regime with the company’s accounts team before March salary is processed.
Also verify: are the company’s PF and ESIC contributions for February deposited? These are deductible only if actually paid, and late deposits attract 12% interest per annum.
ℹ️ IPPC GROUP Note: Pvt Ltd compliance is often managed by the company’s CA but the responsibility for timely action lies with the directors. If you are unsure of your company’s current compliance status, contact us and we will conduct a quick health check.
These Financial Year End FAQs 2026 India help businesses take the right decisions before closing FY 2025–26.
| IPPC GROUP Group | I.P. Pasricha & Co Chartered Accountants | Member firm of Russell Bedford International Have questions about your year-end compliance? Our team is available for free consultations this week for businesses across India. 🌐 www.ippcgroup.com ✉ sailfreely(Replace this parenthesis with the @ sign)capasricha.com |
