It is that time of the year when you rush to your financial advisor for tax guidance. You have not invested throughout the year and want advice on how best to beat the March 31 deadline.

But is March 31 the actual deadline to file tax returns?

Do you think investing in unit linked insurance plans, ULIPs, is the best way of insuring a life? What are the other avenues?

Does having a PAN card makes it mandatory to file returns?

Tax expert Mahesh Padmanabhan of RelaxwithTax answered these and other tax related queries in a chat with Get Ahead readers on March 21.

For those of you who missed the chat, here is the transcript.

Part II - Are credit card loans taxable?

santosh asked, Do one need to go for ULIP? Is it good? If yes, then what's the best product available in the market ? What's your opininon on BajajAllianz Capital Unit Gain? Is it a fund worth investing ?

Mahesh Padmanabhan answers,  at 2007-03-21 14:02:16 You need to first question the objective behind your investing in ULIP. If it is really for the sake of taking out insurance then the first allocation should be towards term insurance which provides maximum coverage at the lowest cost.

In terms of investment in funds, invest in proper Mutual Funds (equity linked savings scheme, ELSS) for tax savings that might go a long way in reducing your overall cost. In case you still want to invest in unit linked insurance plan, ULIP, then you need to check on certain aspects of such plans such as the flexibility such plans offer, the average returns and the length of the fund's existence, the fund manager managing the fund etc.

You should speak with a proper insurance advisor to determine the ideal insurance company and plan.

gourav asked, Hi I am software engineer and working in Europe up till June. I am earning salary in India and tax is deducted from my salary. Is there any need to file return before 31-March can I do it when I return to India?

Mahesh Padmanabhan answers, In case you have filed the return for the financial year 2005-06 then the return currently pending would be that for the financial year 2006-07 and that needs to be filed by July 31, 2007.

In case you have not filed your return for 2005-06 then you have to file the same before March 31, 2007.

AAMIR asked, MY SALARY IS 11,000 PM, I HAVE A PAN CARD SHOULD I HAVE TO PAY TAX THIS YEAR? I HAVE HEARD THAT PAN CARD HOLDERS SHOULD FILE THEIR RETURN. I AM CONFUSED, PLZ GUIDE.

Mahesh Padmanabhan answers, Having a PAN card and payment of taxes are two separate issues. You might have a need to obtain a PAN card due to various facts such as opening a bank account, making certain investment etc.

However, whether your income is to be taxed or not will depend on the net taxable income that you might have after allowing deductions for eligible investments for insurance premium etc. Also, filing of returns would depend on the fact whether you have income in excess of the minimum threshold limits.

ijk asked, I have the income tax certificate for the home loan taken by me from IDBI. This loan is a plot + construction. Currently I have taken only partial amount of loan for the purchase and I am paying only the PRE-EMI. However I have started my construction. My Question is can I avail tax benefit out of this?

Mahesh Padmanabhan answers, You would be eligible to take benefit of interest deduction only after the completion of construction of your house. You would need to accumulate the pre-emi interest as also the interest paid on the loan and take benefit of the same in 5 equal installments from the year of completion of construction.

gauravrsharma asked, My office accounts hav taken details from me in the month of feb only, and have deducted the payable tax from my salary. Still do I have any chance to claim back my money by investing somewhere?

Mahesh Padmanabhan answers, Even though your employer deducts tax at source from your salary based on the current investments made by you, you are still eligible to make investments upto March 31, 2007 and claim eligible deduction directly when you file your IT return.

arun mahajan asked, Dear Mr. Mahesh, I have switched  2 jobs in last 1 year (means current financial year). My TDS and tax are being cut at differnt rates. Is it must to file advance tax before march 31, or I wait for form 16 to be issued later in april by different employers.

Mahesh Padmanabhan answers, The best bet for you would be to first make a correct estimate of tax payable by including both employer income and thereafter reduce the tax already paid by you in terms of salary TDS. If you find that you have further tax to be paid for the current year then it is advisable to pay advance tax to that extent so that you are not required to pay interest on delayed tax payments later.

UnionFinMin asked, if less tax is deducted at source from my salary throughout the year, then how do I pay the balance at the time fo filing my returns?

Mahesh Padmanabhan answers, You can pay tax directly in case of short deduction by the employer. In case you are making the payment before March 31, 2007, then the same would be considered as advance tax and if the same is paid after March 31, 2007 then the same would be considered to be self assessment tax.

You could make the payment using ITNS Challan No 280.

Amitraut asked, Hi Mahesh, I want to invest around Rs 40,000 - Rs 50,000 in some tax saving schemes. I am 32 years old and do not have any insurance but have a PPF account. Tell me how to allocate my funds as I also want to invest in a good ELSS scheme. Can I deposit cash in my PPF account?

Mahesh Padmanabhan answers, PPF is a good scheme with tax free returns of about 8 per cent. However, it would be advisable for you to have a mix of investments that has ELSS, insurance etc.

Insurance would be my first choice as this falls under the basic requirement category for an individual. The assessment as to how much insurance you need could be decided mutually by you with an insurance/financial advisor.

Also, you could do well if you start investing through the year evenly instead of deferring the investment till the end of the year.