As the last date for filing the income tax return (ITR) approaches, one worries over missing the deadline of July 31st. However, things could turn much easier if you arrange the important documents required to file ITR beforehand, as the last-minute running around can unnecessarily delay the process. Moreover, filing income tax return without reconciliation with appropriate documents can result in underreporting which can later lead to notices by the income tax department.
“Many taxpayers may have got their Form 16 and 16A. The return filing date is now July 31, 2022. There is much confusion amongst taxpayers about which documents must be collected for filing of ITR. This is because filing income tax return without reconciliation with appropriate documents leaves room for misreporting or underreporting. Therefore, if you are unsure about the particulars to fill in the income tax return, you should take the help of the instructions published along with the income tax form. Any wrong information may trigger inquiries by the tax department,” says Neeraj Agarwala, Partner, Nangia Andersen India.
While e-filling online returns do make it easier to file your returns, information pre-filled is not always sufficient to process the return. Accordingly, it is advisable to keep documents handy before you start to fill out your income tax return. The documents required would depend on your source of income, adds Agarwala.
What documents should one keep ready before filing ITR?
“This largely depends upon the type of income that you have besides your salary income. Some people have income from house property, income from capital gains etc. whereas almost everybody has interest income in a savings account, though the amount may be lesser,” says Sujit Bangar, Founder, Taxbuddy.com.
Here is a comprehensive checklist of documents for smooth reconciliation and filing of your income tax return:
1. PAN Card: Permanent Account Number, or PAN, is a 10-digit alphanumeric number used for tracking your financial transactions. Banks also can withhold tax at a higher rate of 20 per cent if you do not provide your PAN. Only 10 per cent is deducted if the bank has your PAN details.
2. Aadhaar: Aadhaar is a 12-digit number code used for establishing identity on the basis of demographic and biometric information. It is issued by the Unique Identification Authority of India (UIDAI) under the Government of India with the purpose of verification of identity. Aadhar card also helps to e-verify your ITR form provided your mobile number is registered in the Aadhaar card database.
3. Form 16: Form 16 is a certificate which is issued by employers to their employees shows that TDS has been paid on salary by the employee and the same has been deposited to the tax authorities by the employer on behalf of the employee. Form 16 has two segments - Part A and Part B. Part A gives information like name, address of the employer, Employer's TAN and PAN, Employee's PAN, and month-wise details of tax deducted at source, among other things. Part B gives the salary break-up along with deductions and calculations.
4. Form 26AS: Form 26AS is issued by the Income Tax department and it is an annual tax statement, which contains details of the tax deducted from you, advanced tax paid and refunds availed by you. Often it happens people misreport or underreport their income, therefore, it is always advisable to reconcile your income declared in ITR with Form 26AS.
5. Annual Information Statement (AIS): AIS is more comprehensive compared to the existing form 26AS, which provides information only relating to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). It is a single reference document for taxpayers, which provides complete and detailed information relating to salary, dividends, interest from saving accounts and deposits, securities and mutual funds transactions, off-market debt transactions, foreign remittance, etc.
6. Bank Statements: It is advisable to have bank statements already downloaded for the financial year so that you already know about the interest and other incomes credited to your account. “To be on a safer side just have a look into your bank statement so that you may not miss on interest income,” adds Bangar.
7. Bank Interest Certificates: You should also have Interest Certificates from banks for easy computation of total interest income credited to your account during the financial year. It is important to note that under Section 80TTA of the IT Act an individual can claim a maximum deduction of Rs 10,000 for interest earned from all the savings and fixed deposit accounts held with a bank, co-operative bank or post office.
8. Home loan interest certificate: If you have taken a home loan then download the home loan interest certificate which gives a break up of how much you can claim as deduction under Sections 80C and 24B of the Income Tax Act. Under section 80C you can maximum claim Rs 1.5 lakh as deduction towards principal and you can avail interest deduction under section 24B to the extent of Rs 2 lakh. This limit of Rs 2 lakh is for self-occupied property.
9. Capital Gain/Loss Statement: If you have earned profits through the sale of shares, mutual funds, gold or a house then you need to pay Capital Gain on the profits earned. To know the capital gain amount, download the capital gain statement from the website or app of the broker or Registrar and Transfer agents (RTA) such as CAMS and KFintech.
For example, If you have invested through Zerodha, you can download the capital gains statement online by their app or website. The statement shows the capital gains for transactions done through that broker or RTA. To make tax filing easy many online platforms give the facility of auto-reading tax reports for capital gains. “Also, you need to keep property sale deed handy so that accurate capital gain income can be worked out,” adds Bangar.
10. Foreign Income: If you have earned any foreign income during the period and paid taxes in a foreign country over such income, please keep tax payment-related documents. “You can claim credit for those taxes paid subject to the double taxation avoidance agreement of India with that country. If you are staying on rent, ensure you have rent agreement and rent receipts for rent paid,” says Bangar.
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