Saw this article on TechHive. It worked on PC too. Rewriting for my own reference.
- Open iTunes.
- Preferences > General > Import settings > convert to AAC
- Select the music u want to convert. Right click > Get Info > Options > select the 30 sec (maximum for ringtone) u want
- Click “Ok”. Right click > convert to AAC
- Control Panel > Folder options > View > uncheck “Hide file extension”
- Locate the converted file in Windows explorer. Change extension from “m4a” to “m4r”. Double click and it will appear in iTunes > Tones.