“Why do I still have to pay another ₹30,000, ₹50,000 or even ₹1 lakh while filing my Income Tax Return (ITR), when my company has already deducted tax every month?” This is one of the most common questions we hear from salaried employees during every ITR filing season. Many feel disappointed, confused, and even frustrated because they believed their tax liability was already settled through monthly TDS.
Recently, one of our Bengaluru clients with an annual salary exceeding ₹1 crore reviewed the tax computation we prepared. His response genuinely reflected what thousands of taxpayers experience every year:
“Is there any way we can reduce the tax payable below ₹5,000? Huge tax paid… tears roll down to pay any additional taxes.”
After analysing his financial records, we found that the additional tax was not because of any mistake in payroll or ITR filing. It arose because several taxable incomes received during the year—such as bank interest, fixed deposit interest, dividend income, and small capital gains from mutual funds—were never considered while calculating monthly TDS. This situation is far more common than most salaried employees realise.
Why Extra Tax Becomes Payable During ITR Filing
- Dividend received from shares, mutual funds or ETFs
- Savings bank and fixed deposit interest
- Capital gains from shares, mutual funds and ETFs
- Foreign dividends and RSU income
- Rental income and other taxable receipts
- Income from multiple employers during the year
- Any taxable income not reported to the employer for TDS calculation
The important point is that Income Tax Return filing does not create additional tax. It only calculates the correct tax on your total income from all sources as required under the Income-tax Act. If some income was never included in your employer’s TDS computation, the balance tax naturally becomes payable while filing the return. In many cases, taxpayers also end up paying interest for delayed payment of tax, making the final amount even higher.
The good news is that this can often be avoided with our smart tax planning approach. With timely tax planning, proper payroll structuring, advance tax reviews, capital gain planning, tax-loss harvesting, Foreign Tax Credit (FTC) claims, family investment planning, HUF structuring where appropriate, and periodic reviews throughout the financial year, many taxpayers can significantly reduce last-minute tax surprises while remaining fully compliant with Indian tax laws.
At Prakasha & Co., we don’t believe tax planning should begin when you’re preparing your Income Tax Return in July. The best opportunities to optimise taxes usually arise between April and March. That’s why our approach focuses on reviewing your salary structure, investments, dividends, bank interest, RSUs, foreign income, capital gains, advance tax liability, and employer payroll well before the financial year closes—helping employees and business owners make informed decisions rather than expensive last-minute corrections.
12 Smart Tax Decisions Before 31 March
Most tax-saving opportunities are available before the financial year ends. A simple review of the following can help reduce unexpected tax while filing your Income Tax Return.
- ✔ Review your salary structure and payroll.
- ✔ Declare dividend and bank interest to your employer.
- ✔ Estimate and pay Advance Tax, if applicable.
- ✔ Review capital gains from shares, mutual funds and ETFs.
- ✔ Consider Tax Harvesting before 31 March.
- ✔ Utilise Employer NPS benefits, wherever available.
- ✔ Review RSUs, ESOPs and foreign investments.
- ✔ Claim eligible Foreign Tax Credit (FTC) through Form 67.
- ✔ Review HUF and family investment planning.
- ✔ Check clubbing provisions before transferring investments.
- ✔ Verify all taxable income before the financial year closes.
- ✔ Complete a professional tax review before filing your ITR.
A few smart decisions before 31 March can often save much more tax than trying to plan after the financial year has ended.
Tax Planning Starts in April, Not During ITR Filing
One of the biggest misconceptions is that taxes can be reduced while filing the Income Tax Return (ITR). By the time you prepare your return, the financial year has already ended, and most tax planning opportunities are no longer available.
Smart tax planning begins from April itself. Instead of waiting until July, reviewing your salary, investments, dividends, bank interest, capital gains, and foreign income throughout the year helps avoid unexpected tax demands and unnecessary interest.
Our Smart Tax Planning Calendar
- April: Review salary structure and payroll.
- June: Review investments, dividend and bank interest.
- September: Estimate tax and pay Advance Tax if required.
- December: Review capital gains, RSUs and foreign income.
- February: Plan tax harvesting for shares, mutual funds and ETFs.
- March: Final tax review before the financial year closes.
- July: File an accurate Income Tax Return with minimum surprises.
At Prakasha & Co., we follow this year-round review process for our clients instead of limiting our support to ITR filing. This helps employees, professionals and business owners identify tax-saving opportunities well before 31 March, while staying fully compliant with the Income-tax Act.
Our Smart Tax Planning Process
Every taxpayer’s income pattern is different. Some receive dividends, others earn FD interest, hold RSUs, sell mutual funds, invest overseas, or have rental income. Instead of using a one-size-fits-all approach, we review every major source of income to identify legal tax-saving opportunities before the financial year ends.
What We Review During Tax Planning
- ✔ Salary structure and payroll optimisation
- ✔ Employer NPS and eligible tax benefits
- ✔ Dividend income from shares, mutual funds and ETFs
- ✔ Savings account and Fixed Deposit interest
- ✔ Capital gains from shares, mutual funds and ETFs
- ✔ Tax harvesting opportunities before 31 March
- ✔ RSUs, ESOPs and foreign investment taxation
- ✔ Foreign Tax Credit (FTC) eligibility through Form 67
- ✔ Advance Tax liability to avoid interest
- ✔ HUF and family tax planning, wherever legally applicable
- ✔ Income in spouse or family members’ names, considering clubbing provisions
- ✔ Final tax estimation before the financial year closes
Our objective is simple—help you pay the right amount of tax, not more and not less. Proper planning can often prevent last-minute tax demands, reduce interest liability, avoid double taxation on foreign income, and improve your overall post-tax wealth while remaining fully compliant with the Income-tax Act.
Many of these reviews take only a few minutes but can make a significant difference when carried out before 31 March. Once the financial year closes, most planning opportunities are no longer available.
Salary & Payroll Planning – Save Tax Before It Gets Deducted
For most salaried employees, the best tax planning opportunity is not while filing the Income Tax Return—it is while designing the salary structure at the beginning of the financial year. A properly planned payroll can legally reduce tax, improve monthly take-home salary and avoid additional tax payable at the time of ITR filing.
Unfortunately, many companies continue with the same salary structure year after year without reviewing whether employees are fully utilising the benefits available under the Income-tax Act. As a result, employees often pay more tax than necessary.
What We Review in Payroll Planning
- ✔ Selection of the most beneficial tax regime.
- ✔ Correct salary structure based on employee profile.
- ✔ Employer NPS contribution under Section 80CCD(2).
- ✔ Flexible Benefit Plan (FBP), wherever applicable.
- ✔ Tax-free official reimbursements and allowances.
- ✔ Monthly TDS based on actual income from all sources.
- ✔ Declaration of dividend, FD interest and other taxable income.
- ✔ Quarterly review to avoid tax shortfall.
Our payroll advisory is not limited to salary processing. We work closely with employers and employees to ensure tax planning happens throughout the financial year. This helps employees avoid unexpected tax demands, while employers can provide a more tax-efficient salary package without increasing the overall cost to the company.
Several of our corporate clients in Bengaluru have adopted this proactive payroll approach. Their employees receive regular tax guidance, timely reminders for investment declarations, advance tax reviews and year-end tax planning, making the final ITR filing much smoother and reducing last-minute tax surprises.
A well-planned payroll doesn’t just process salaries—it helps employees retain more of what they earn.
Use Every Tax Benefit Available Under the New Tax Regime
Many taxpayers believe that choosing the New Tax Regime means there are no tax-saving opportunities. That is one of the biggest misconceptions. Although many traditional deductions are no longer available, several valuable exemptions, deductions and employer-provided benefits can still legally reduce your tax liability.
The key is to review your salary structure, employer benefits and income sources before the financial year ends. Most employees never receive this review and therefore miss legitimate tax-saving opportunities available under the Income-tax Act.
Important Tax Benefits We Review
- Standard Deduction available for eligible salaried employees and pensioners.
- Employer’s NPS Contribution under Section 80CCD(2), one of the most effective tax-saving options available even under the New Tax Regime.
- Official reimbursements such as mobile, internet, travel and other eligible business expenses provided through payroll.
- Gratuity, Leave Encashment and Pension Benefits wherever applicable.
- Family Pension deduction for eligible taxpayers.
- Agniveer Corpus Fund benefits available under the Income-tax Act.
- Interest deduction for eligible let-out house properties as permitted under the Act.
- Agricultural income exemption, wherever applicable.
Every employee’s salary package is different. A benefit available to one employee may not be available to another. Our objective is to identify every eligible tax benefit based on your employment terms, salary structure and income pattern, so that no legitimate tax-saving opportunity is missed.
Even a small change in payroll structure at the beginning of the year can increase your monthly take-home salary and significantly reduce additional tax payable while filing your Income Tax Return.
Dividend & Bank Interest – The Hidden Tax Most Employees Miss
Your employer deducts TDS mainly on your salary. However, income such as bank interest, Fixed Deposit (FD) interest, dividends, mutual fund income, and capital gains is generally not available to your payroll team unless you disclose it. This is one of the biggest reasons employees receive an unexpected tax demand while filing their Income Tax Return.
Even if the amount appears small every month, the total income accumulated during the financial year can significantly increase your final tax liability. If no Advance Tax is paid, interest may also become payable under the Income-tax Act.
Common Income That Is Often Missed
- ✔ Savings Bank Interest
- ✔ Fixed Deposit (FD) Interest
- ✔ Recurring Deposit (RD) Interest
- ✔ Dividend from Shares, Mutual Funds and ETFs
- ✔ Bond and Debenture Interest
- ✔ Small Capital Gains from Shares and Mutual Funds
- ✔ Foreign Dividend and Investment Income
We recently assisted a Bengaluru-based salaried employee whose annual salary exceeded ₹1 crore. His employer had deducted substantial TDS throughout the year. However, while preparing the Income Tax Return, we identified additional taxable income from FD interest, dividend income and mutual fund capital gains, resulting in an additional tax liability. Had these incomes been reviewed during the year, the tax could have been planned through proper TDS adjustment or timely Advance Tax payments, avoiding the year-end surprise.
At Prakasha & Co., we recommend reviewing these income sources every quarter instead of waiting until ITR filing. Wherever possible, we help employees estimate the additional tax in advance, revise monthly TDS through payroll, or plan Advance Tax payments, making the final return filing much smoother.
If your employer processes salaries through a structured payroll system, these reviews can be built into the annual payroll cycle itself. Learn more about our Payroll Services in Bangalore, where we help companies provide year-round tax planning support to their employees instead of limiting assistance to the ITR filing season.
Tax Harvesting – One Smart Decision Before 31 March Can Save Tax
Many investors pay more Capital Gains Tax simply because they never review their investment portfolio before the financial year ends. A simple review during February or March can help you legally reduce your tax liability through Tax Harvesting.
Tax Harvesting means reviewing your investments and, where appropriate, selling loss-making investments to offset taxable capital gains earned during the same financial year. It is a completely legal tax planning strategy available under the Income-tax Act when applied correctly.
Investments We Review for Tax Harvesting
- ✔ Listed Equity Shares
- ✔ Mutual Funds
- ✔ Exchange Traded Funds (ETFs)
- ✔ Foreign Shares and RSUs
- ✔ ESOP Holdings
- ✔ Other Capital Assets eligible for set-off under the Income-tax Act
Simple Example
Suppose you earned a capital gain of ₹2,50,000 by selling one investment during the year. At the same time, another share or mutual fund in your portfolio is showing a loss of ₹80,000. If that loss is realised before 31 March and the applicable legal conditions are satisfied, it may be available for set-off against eligible capital gains, thereby reducing your taxable capital gain.
Many investors continue holding underperforming investments without reviewing the tax impact. A timely portfolio review before the financial year closes can often reduce the tax payable while also helping you rebalance your investments.
At Prakasha & Co., Tax Harvesting forms an important part of our annual tax planning process. We review your investment portfolio, capital gains, carried-forward losses and proposed transactions before 31 March, helping you make informed decisions instead of discovering missed opportunities after filing your Income Tax Return.
Foreign Income & Foreign Tax Credit – Avoid Paying Tax Twice
If you earn income from foreign shares, RSUs, ESOPs, overseas dividends or investments, you may not have to pay tax twice on the same income. Many countries deduct tax before crediting the income, and eligible taxpayers can claim Foreign Tax Credit (FTC) in India by complying with the prescribed procedures, including filing Form 67, wherever applicable.
We Review
- ✔ RSU and ESOP taxation
- ✔ Foreign dividend income
- ✔ Foreign Tax Credit (FTC)
- ✔ Form 67 compliance
- ✔ Schedule FA reporting
- ✔ Double Taxation Relief under DTAA
Recently, we assisted a Bengaluru software professional receiving RSU dividends from the United States, where tax had already been withheld. By properly reviewing the documents and claiming the eligible Foreign Tax Credit, we helped ensure the same income was not taxed twice in India.
In another case, we advised a client on the taxation of a New Zealand KiwiSaver withdrawal. After analysing the amount already taxed overseas and the applicable Indian tax provisions, we determined the correct taxable income in India and helped avoid double taxation to the extent permitted under the law.
If you have overseas investments or foreign income, reviewing them before filing your Income Tax Return can help avoid reporting errors, missed tax credits and unnecessary tax payments.
Family Tax Planning – Save Tax Legally as a Family
Tax planning should not focus only on one individual. In many families, all investments such as Fixed Deposits, shares, mutual funds and rental income are held in the name of the highest earning member, resulting in unnecessary tax.
With proper planning, family investments can be structured more efficiently while complying with the Income-tax Act. Every plan should consider the applicable clubbing provisions before transferring or investing assets.
Our Family Tax Planning Review
- ✔ HUF formation, wherever suitable
- ✔ Family investment planning
- ✔ Spouse and adult children’s investments
- ✔ Clubbing provisions review
- ✔ Separate Demat, Mutual Fund and FD planning
- ✔ Long-term wealth and tax planning
A well-planned family investment strategy can improve overall tax efficiency while helping each family member build independent wealth over the long term.
Advance Tax Planning – Avoid Interest and Last-Minute Tax
Many taxpayers pay additional tax during ITR filing simply because no Advance Tax was paid during the financial year. This often results in interest liability under the Income-tax Act in addition to the actual tax payable.
Instead of waiting until July, we estimate your tax liability during the year and advise timely Advance Tax payments wherever required.
Our Advance Tax Review Includes
- ✔ Estimated annual tax liability
- ✔ Dividend and interest income review
- ✔ Capital gains estimation
- ✔ Quarterly Advance Tax calculation
- ✔ Review of interest under Sections 234A, 234B and 234C
Regular tax reviews during the year help avoid unnecessary interest, improve cash flow planning and reduce unexpected tax demands while filing the Income Tax Return.
Investment Review Before 31 March
The last few weeks of the financial year offer valuable opportunities for tax planning. A simple review before 31 March can help identify investments that require action before the year closes.
Rather than reviewing investments only for returns, we also evaluate their tax impact to ensure no planning opportunity is missed.
What We Review Before Year End
- ✔ Fixed Deposit and Savings Interest
- ✔ Dividend income
- ✔ Shares, Mutual Funds and ETF holdings
- ✔ Capital gains and carried-forward losses
- ✔ RSUs, ESOPs and foreign investments
- ✔ Advance Tax liability
- ✔ Tax Harvesting opportunities
Our objective is to complete this review before the financial year ends, giving you sufficient time to make informed decisions instead of discovering missed opportunities while filing your ITR.
Common Tax Planning Mistakes That Cost Employees More Tax
Most taxpayers don’t pay extra tax because of incorrect ITR filing—they pay it because tax planning was never done during the financial year. Avoiding these common mistakes can save both tax and unnecessary interest.
- ❌ Waiting until ITR filing to start tax planning.
- ❌ Not informing the employer about dividend or FD interest.
- ❌ Ignoring Advance Tax liability.
- ❌ Missing Tax Harvesting opportunities before 31 March.
- ❌ Keeping all investments in one family member’s name.
- ❌ Not reviewing RSUs, ESOPs and foreign investments.
- ❌ Forgetting to claim eligible Foreign Tax Credit.
- ❌ Missing Schedule FA or Form 67 compliances.
- ❌ Continuing with an old salary structure without review.
- ❌ Paying more tax simply because no professional review was done.
A one-hour tax planning review before the financial year ends can often avoid these costly mistakes and make your Income Tax Return filing much smoother.
Real Tax Planning Cases We Recently Handled
Every tax planning strategy should be practical, legally compliant and based on the taxpayer’s actual financial situation. Here are a few examples of how proactive tax planning helped our clients.
₹1 Crore Salaried Employee
While preparing the Income Tax Return, we found additional tax payable due to dividend income, bank interest and mutual fund capital gains that were never considered during payroll. We recommended quarterly tax reviews and Advance Tax planning to avoid similar surprises in future years.
Foreign RSU Dividend
A software professional receiving dividends from US-listed RSUs had tax already deducted overseas. We assisted in claiming the eligible Foreign Tax Credit through Form 67, helping avoid double taxation in India.
New Zealand KiwiSaver
We reviewed the taxation of a KiwiSaver withdrawal and analysed the income already taxed overseas. After applying the relevant Indian tax provisions, the correct taxable income was determined, preventing unnecessary double taxation.
Corporate Payroll Review
Several Bengaluru companies now engage us for year-round payroll tax planning. By reviewing salary structures, Employer NPS, taxable income declarations and quarterly tax estimates, employees receive better tax guidance throughout the year instead of only during ITR filing.
Why Businesses & Employees Choose Prakasha & Co.
Tax planning is not a one-time exercise carried out while filing your Income Tax Return. Our approach combines payroll planning, investment review and tax advisory throughout the financial year to help individuals and companies remain compliant while improving overall tax efficiency.
- ✔ Income Tax Planning throughout the financial year
- ✔ Payroll Structuring & Employee Tax Advisory
- ✔ Advance Tax Planning
- ✔ Tax Harvesting Review
- ✔ RSU, ESOP & Foreign Income Taxation
- ✔ Foreign Tax Credit (FTC) & Form 67
- ✔ HUF & Family Tax Planning
- ✔ High Net-worth Individual (HNI) Tax Planning
- ✔ Income Tax Return Filing & Compliance
Our Payroll Services help companies provide structured tax planning support to employees throughout the year, making salary processing, TDS deduction and Income Tax Return filing much more efficient.
Frequently Asked Questions
Why do I have to pay additional tax even after my employer deducted TDS?
Your employer generally deducts TDS only on salary. Income such as dividend, bank interest, capital gains, rental income or foreign income may not be included unless disclosed by you.
Can tax be reduced while filing the Income Tax Return?
In most cases, no. Tax planning should ideally be completed before 31 March. ITR filing mainly reports the income already earned during the financial year.
What is Tax Harvesting?
Tax Harvesting is the process of reviewing eligible capital assets before 31 March and, where appropriate, realising losses that may be available for set-off against taxable capital gains in accordance with the Income-tax Act.
Is dividend income taxable?
Yes. Dividend income is generally taxable in the hands of the recipient and should be considered while estimating your overall tax liability.
Can I claim Foreign Tax Credit?
If tax has already been paid in a foreign country and the applicable legal conditions are satisfied, you may be eligible to claim Foreign Tax Credit in India by following the prescribed procedures, including Form 67 wherever applicable.
Should I pay Advance Tax?
If your estimated tax liability exceeds the prescribed limits after considering TDS, Advance Tax may be applicable. Paying it on time can help avoid interest under the Income-tax Act.
Does the New Tax Regime still offer tax planning opportunities?
Yes. Although many deductions are not available, several benefits such as Employer NPS contribution, standard deduction, eligible reimbursements and proper payroll planning can still improve tax efficiency.
When should I start tax planning?
The ideal time is at the beginning of the financial year. Regular reviews throughout the year provide much better results than waiting until ITR filing.
Need Professional Tax Planning?
Whether you are a salaried employee, software professional, business owner, NRI or high-income taxpayer, proactive tax planning can help reduce unexpected tax demands, avoid double taxation and improve your overall tax efficiency while remaining fully compliant with the Income-tax Act.
Prakasha & Co. has been assisting individuals and businesses across Bengaluru with Income Tax Planning, Payroll Advisory, Corporate Tax, Foreign Income, RSU Taxation, Foreign Tax Credit, Capital Gains Planning and Income Tax Return Filing for over two decades.
Author: Prakasha C.R., CS and CA Tax Consultant
Experience: 20+ Years in Income Tax, Payroll Advisory, Corporate Taxation and Business Compliance.
Last Updated: July 2026
Payroll compliance in Bangalore
