5 Last-Minute Tax Saving Tips for Business Owners Before March 31st (FY 25-26)

Introduction

As the financial year draws to a close, many business owners feel they’ve missed the window for tax planning. In reality, there’s still time to make a few smart financial decisions before March 31 that can reduce your tax liability for FY 2025-26.

For SMEs, proprietors, and professionals, year-end tax planning isn’t about complicated strategies. It’s about making the most of available deductions, timely investments, and properly recording business expenses.

Here’s what you can still do before the financial year closes.

Can You Save Tax at the Last Minute?

Yes, business owners can still save on taxes by making eligible financial decisions before March 31, such as recording allowable business expenses, purchasing assets for depreciation, clearing statutory payments, and making tax-saving investments where applicable.

Income tax provisions allow tax reduction through:

• Business expenses
• Depreciation on assets
• Insurance payments
• Retirement contributions
• Eligible investments (depending on the tax regime chosen)
  

Even decisions taken in the final weeks of March can help reduce taxable income for FY 2025-26.

The key is to focus on expenses, payments, and investments that are recognized within the financial year, ensuring they are properly recorded in the books before closing.

Top 5 Strategies to Reduce Tax Liability

Here are five practical tax-saving strategies business owners can use before March 31.

1. Maximize Section 80C Investments (PPF, ELSS)

Section 80C allows deductions of up to ₹1.5 lakh from taxable income.

Popular options include:

• Public Provident Fund (PPF)
• ELSS mutual funds
• Life insurance premium
• Principal repayment of the home loan
• Tax-saving fixed deposits

For business owners who haven’t yet used this limit, investing before March 31 can immediately reduce taxable income.

Example

Investment	Amount (₹)
ELSS	70,000
PPF	50,000
LIC Premium	30,000
Total Deduction	1,50,000

This deduction directly reduces tax liability.

2. Purchase Business Assets (Depreciation Benefit)

Buying business assets before March 31 allows you to claim depreciation in FY 2025-26.

Common Depreciation Rates (Income Tax):

Common Depreciation Rates (Income Tax):

Asset Category	Depreciation Rate
Building (Residential)	5%
Building (Non-residential)	10%
Furniture & Fixtures	10%
Plant & Machinery (General)	15%
Motor Car (Business use)	15%
Computers & Computer Software	40%
Intangible Assets (Goodwill, Patent, Trademark, License)	25%

Important Year-End Rule

If an asset is purchased and put to use for less than 180 days in the financial year, only 50% of the depreciation can be claimed.

Example:

• Computer purchased in February—Depreciation = 20% instead of 40%
• Machinery purchased in January – Depreciation = 7.5% instead of 15%

Even if assets are purchased late in March, depreciation can still be claimed as per applicable rules.

Depreciation Illustration

Asset	Cost (₹)	Rate	Depreciation (₹)
Laptop	80,000	40%	32,000
Office Furniture	50,000	10%	5,000

Depreciation reduces business profits and taxable income.

3. Health Insurance Premiums (Section 80D)

Section 80D allows deductions for health insurance premiums paid for:

• Self
• Spouse
• Children
• Parents

Covered Person	Maximum Deduction (₹)	Explanation
Self, Spouse, and Children	25,000	Premium paid for health insurance covering the taxpayer and immediate family qualifies for a deduction under Section 80D.
Parents (Senior Citizens)	50,000	Premium paid for health insurance of parents aged 60 years or above is eligible for a higher deduction limit.

This deduction is available even for proprietors and professionals. Paying premiums before March 31 ensures the deduction applies in FY 2025-26.

4. Pre-pay Business Expenses

Businesses following the mercantile system can record expenses incurred during the year. However, certain payments made before March 31 can still reduce taxable income.

Examples:

• Office rent
• Professional fees
• Software subscriptions
• Maintenance contracts
• Internet and utility bills

Pre-paying legitimate business expenses reduces profit for the year and lowers tax liability. This strategy is commonly used by SMEs during year-end planning.

5. Contribute to NPS (National Pension System)

Business owners can claim deductions under:

• Section 80CCD(1)
• Section 80CCD(1B)

An additional deduction of ₹50,000 is available for NPS contributions. This deduction is over and above Section 80C.

Example Deduction Structure

Section	Limit (₹)
80C	1,50,000
80CCD(1B)	50,000
Total Possible Deduction	2,00,000

NPS contributions help reduce taxes while building retirement savings.

“Tax saving is just the start of a great year. Now that you’ve secured your savings, learn How to Set Financial Goals for Your Small Business in 2026.“

Understanding Section 43B(h) for Tax Deductions

A critical compliance update for FY 2025-26 relates to payments made to MSMEs.

Under Section 43B(h), expenses payable to MSME vendors are allowed as deductions only if payment is made within the time limit specified under the MSME Act.

This means:

• Payments must be made within 45 days (if an agreement exists)
• Or within 15 days (if no agreement exists)

If payment is not made within this period:

• The expense will not be allowed as a deduction in FY 2025-26.
• It will be allowed only in the year of actual payment.
  

Illustration

Invoice Date	MSME Payment Due	Paid?	Deduction Allowed
Feb 10	March 27	Yes	FY 25-26
March 5	April 20	No	Next FY

This rule makes vendor payment tracking extremely important during year-end closing.

Businesses should review all MSME payables before March 31.

Conclusion

Tax planning doesn’t always have to start at the beginning of the financial year. Even in the final weeks before March 31, business owners can still take meaningful steps to reduce their tax liability for FY 2025-26.

Simple actions like recording pending expenses, purchasing business assets, clearing MSME dues, paying insurance premiums, or making retirement contributions can make a noticeable difference in taxable income. The goal isn’t just to save on tax but to ensure your books accurately reflect your business activity for the year.

Before closing the financial year, take a moment to review your accounts, outstanding payments, and eligible deductions. A little attention now can help you avoid missed opportunities, improve compliance, and start the next financial year with clean and well-prepared financial records.