Income Tax Return (ITR) is a kind of self-assessment of income tax. You are confirming the amount of tax paid by you and intimating the I-T Department (Income Tax Department) of any refund you may be eligible for. It is also the perfect record for your tax payment, financial history and wealth.
For Salaried Employees
For salaried employees, the only documents required to file income tax returns are:
- Form 16 (provided by employer)
- PAN number
Documents related to Interest Income
- For fixed deposits, interest income statement
- TDS certificate (issued by banks and other institutions)
- For interest on savings account, bank statement or passbook
Form 26AS is provided by the Income Tax Department and is available on its website. It is a summary of taxes deducted on your behalf as well as the taxes that have been paid by you. It has the following details:
- Tax deposited by taxpayers
- Tax refund received by taxpayers in the financial year
- Tax deducted by deductors on behalf of the taxpayer
Documents required to Claim the following expenses as Deductions
Certain expenses or investments are eligible for tax deductions. Rs.1.5 lakh is the maximum amount that can be claimed as deductions. It is important to keep the corresponding documents at hand to claim these expenses as deductions. Some of these are documents related to:
- Children’s school tuition fees
- Life insurance premium payment
- Provident Fund contribution
- Home loan principal repayment
- Registration and stamp duty charges
- Mutual funds or Equity-linked Savings Scheme investments
Other Investment Documents
- Interest payments for education loan
- Statements of stock trading (this may be taxed under Capital Gains)
- Housing loan interest paid. There is a tax saving of up to Rs.2 lakh that can be claimed for self-occupied houses. There is no limit for tax saving for deemed let out or let out property but the overall loss that one can claim is Rs.2 lakh under the House Property head.
What documents will I require to file ITR?
If you are a salaried employee, these are the documents you would need before you sit down to file your I-T Return:
- If you are paying tax, you surely have a Permanent Account Number (PAN) with the I-T Department. One of the first documents you need is a copy of the PAN Card.
- For salaried individuals, tax is deducted from your salary before it is credited to your account. The employer, at the end of the fiscal year, will provide you with your Form-16, which contains your salary details, the tax exemptions under various heads based on the documents you have provided to your employer, and your personal information. This Form 16 – in two documents: Form 16A and Form 16B – is mandatory to file your ITR.
- If you are eligible for an income tax refund – that is, if more tax has been deducted from your salary than is required – then you also need to submit a cancelled cheque to the I-T Department to confirm your bank account number.
Companies that deduct tax at source also ask employees to furnish all documents relevant to additional income (from interests on savings accounts, income from other sources, etc.) and documents proving your investments under various provisions of the I-T Act for tax exemption. Since all this is included in the Form 16, you need not produce any more documents. However, if there are proofs of investments and income that you have not submitted to the company, you can add them to the ITR. These include:
- To show your income from interest on savings account and others, you need to submit a copy of your bank statement. You can also include interest income statement for Fixed Deposits and/or Recurring Deposits if you have any.
- If you are not a salaried individual, you need to produce the Tax Deducted at Source (TDS) certificate issued by banks or other institutions.
- You may also submit Form 26AS, which can be downloaded from the TRACES website. This form, which is an Annual Statement, is a live record of all your tax-related activity done through PAN.
- If you have made advance tax payments or self-assessments, you need to produce the tax payment challans issued for them.
- Documents connected with your investments, life and medical insurance premiums, pension plans, Education Loan repayments, home loan interest payments, medical treatment of elderly parents or physically challenged persons, and donations to charity.
What Investments will give me Tax Exemption?
To get a clearer idea of what documents you will require to show as proofs of investment, here’s a list of items that give you tax exemption from paying tax:
Section 80C: You can claim a maximum cumulative amount of Rs. 1.5 lakh under Section 80C. The following items are included under Section 80C:
- Investment in Public Provident Fund (PPF)
- Contribution to Employees Provident Fund (EPF)
- Investment in National Savings Certificate (NSC)
- Premium payment for life Insurance policies
- School fees of children
- Repayment of Home loan principal
- Investment in Sukanya Samriddhi Scheme
- Investment in Unit-linked Insurance Plans (ULIPs)
- Investment in Equity Linked Savings Scheme (ELSS)
- Deferred annuity plan purchase
- Investment in 5-year Fixed Deposit scheme
- Senior Citizens savings scheme
- Contribution to notified securities/deposits scheme
- Subscription to notified pension funds set up by Mutual Fund or UTI.
- Investment in term deposit schemes of the National Housing Bank
- Contribution to term deposit schemes of a public sector or housing finance company
- Investment in notified LIC annuity plans
- Investment in equity shares/debentures of an approved eligible issue
- Subscription to notified bonds of NABARD
Section 80CC: This refers to investment in annuity plans of LIC or other insurers for pension, from a fund referred to in Section 10 (23AAB).
Section 80CCD: This includes contribution to National Pension Scheme accounts. The following exemptions apply to NPS:
- Employee’s contribution to NPS, a maximum of Rs. 1 lakh
- Employer’s contribution to NPS, a maximum of 10% of the salary
- Up to Rs. 50,000 additional contribution to NPS
Section 80CCG: For investments in equities, through Rajiv Gandhi Equity Scheme, you can claim up to 50% of the amount invested in equity shares or Rs. 25,000, whichever is lower.
Section 80D: Payments made towards medical insurance for self, spouse and children will get you deductions up to Rs. 25,000, while medical insurance for parents aged over 60 will get you deductions up to Rs. 30,000.
Section 80DD: If you are spending for medical treatment or maintenance of physically challenged persons, the following exemptions apply:
- 40% to 80% disability – Rs. 75,000
- More than 80% disability – Rs. 1,25,000
Section 80DDB: If you are treating yourself or a dependent relative for any of the diseases specified in Rule 11DD (which includes neurological diseases, malignant cancers, AIDS, chronic renal failure and haematological disorders), then you can claim the following deductions:
- For people aged below 60: Up to Rs. 40,000
- For people aged between 60 to 80: Up to Rs. 60,000
- For people aged above 80: Up to Rs. 80,000
Section 80E: Interest paid on education loan for self, spouse or children, for a maximum period of 8 years, can be claimed under this section.
Section 80EE: If you are a first-time house owner, you can claim exemption on interest paid on home loan.
Section 80G: Donations to charity and social causes come under this section. A maximum of Rs. 10,000 is exempted from tax.
Section 80GG: In case House Rent Allowance (HRA) is not part of your salary, you can claim not more than 25% of the annual income.
Section 80GGC: If you have made any contributions to political parties through cheque or other traceable means and not cash, you can claim exemption from tax on the given amount.
Section 80RRB: You can claim tax deduction on up to Rs. 3 lakh if any part of your income comes from royalty of a patent.
Section 80TTA: Up to Rs. 10,000 interest income from savings account is exempt under this section.
Section 80U: If you are physically or mentally challenged, you can claim exemption between Rs. 75,000 to Rs. 1.25 lakh depending on the severity of the disability.
Now that you know what is what in relation to filing income tax returns, make sure that you file your ITR on time this assessment year – that is, no later than July 31, 2016. Filing ITR will ensure that you are adhering to the country’s rules and also taking advantage of all the tax exemptions provided to you by the government.
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