The direct tax that is directly paid by a taxpayer to the Central Government is called the income tax. Paying the income tax is mandatory for all the individuals who have taxable income. However, the tax liability differs from individual to individual with respect to the tax slab that they fall under. The liability is also dependent on the source(s) of their income.
Income Tax Return (ITR) Filing:
The filing of income tax returns has become much simpler now as an individual can do it just by logging in to the official return filing portal. However, there are chances that an error might occur while filing the returns. It is always better and safer to take precautions to avoid such errors. One of the major precautions that an individual can take before filing his/her income tax returns is to make sure that he/she has ready access to all the required documents.
Documents required for filing income tax returns:
As the deadline for the filing of income tax returns is nearing, it is recommended to start accumulating the documents that are required for filing of returns. Having the documents will help you save yourself from the last-minute rush. Listed below are the documents that are needed to file your income tax returns:
- Form 16: Form 16 is also known as the TDS (Tax Deducted at Source) Certificate. Form 16 is the base for filing the income tax returns. Thus, Form 16 is the first form that should be collected. The form is provided by your employer after furnishing the information related to the taxes paid on behalf of you. This is done after taking your salary, allowances, and deductions into consideration.
- Form 16 A: Form 16 A is the document which records all the details related to tax deducted at source by deductors other than the employer. This tax is usually deducted by banks or other institutions for the interest or commission which is earned by you during the year. This Form can be collected from the respective banks or institutions.
- Form 26AS: Form 26AS reflects the details of every tax deducted from your income by any deductor and deposited on your behalf. Form 26AS can be downloaded from the official website of the income tax department. On selecting the Form 26AS option on the website, you will be automatically redirected to the TRACES website, from where you can download the statement. This statement shows the total amount of tax paid against a PAN in a financial year. If there is any discrepancy, it is suggested that you pay the necessary tax in order to avoid any kind of trouble in the future.
- Capital Gain Tax: In case you have invested in shares, mutual funds, etc., you are required to collect a capital gain statement. This statement will be issued by your broking house. It contains the details of all the short-term capital gains that are required to be paid in case you have exited certain shares before the tenure of 1 year. Even though you may not have to pay taxes on long-term capital gains, you are required to mention them as well in your statement.
- Aadhaar Card: There is a stay order on the Aadhaar and PAN linking mandate, as the judgement is pending in the Supreme Court. However, it is recommended to keep the Aadhaar card ready as you are needed to provide your Aadhaar number in the Income Tax Returns (ITR) form. Aadhaar number makes the e-verification process simpler as you would just have to use the One Time Password (OTP) that is sent to your phone number which is registered with your Aadhaar.
- PAN card: PAN card is one of the most important documents that you should keep ready with you. Your Permanent Account Number (PAN) acts as your identity proof and has to be mentioned in your Income Tax Returns.
- Self assessment Challan/Advance tax Challan: In case you have done a self assessment and paid any self assessment tax, you are required to fill up the details in the respective form while filing your Income Tax Returns.
- Details about all your bank statements: You will have to provide the details of all your savings accounts while filing your Income Tax Returns (ITR). That is because the details of your savings account interest and Fixed Deposit interest are needed. The total interest amount from these sources is to be furnished under the ‘Income from Other Sources’ head. The deductions under Section 80TTA can be claimed only after recording all the interests earned during the financial year. It also needs to be noted that the deductions under Section 80TTA are applicable only for Savings Account interest. Interest earned on Fixed Deposits are not applicable.
- Statement related to home loan: In case you have taken a home loan, you are required to collect the statement of the loan. The home loan statement allows you to ascertain the deduction that you need to claim for the principal and the interest on the basis of the break up furnished in the statement. Deductions on the principal amount can be claimed under Section 80C while the deductions on the interest amount can be claimed under Section 24.
- Details related to property: While filing the ITR forms you have to mention the details of any property that you have bought or sold during the financial year. Details such as ownership, purchase, sale, rental incomes (if any) etc. are to be provided. In case of disposal of a property, you have to furnish the details related to any long-term or short-term capital gains arising out of it.
- Deductions under Section 80D to 80U: Apart from the standard deductions under Section 80C, an individual can also claim exemptions under Section 80D to 80U of the Income Tax Act.
Tax-saving proofs: You can lower your tax liability by claiming exemptions on the investments and expenditures that are eligible for exemption under Section 80C, 80CCC, and 80CCD(1) of the Income Tax Act. A few common tax-saving investments and expenses are:
- Employees Provident Fund (EPF)
- National Pension Scheme (NPS)
- Life insurance premiums paid
- Investments in ELSS schemes of mutual funds
- Public Provident Fund (PPF) etc.
- Salary slips: For salaried taxpayers, it is important to keep the salary slip ready. The salary slip consists of all the basic details related to the salary of an individual including basic salary, Dearness Allowance (DA), TDS amount, House Rent Allowances (HRA), Travelling Allowances (TA), standard deductions, etc. These details are necessary to file the income tax returns.
- Interest certificate from Banks and Post Office: The interest earned by an individual from savings bank account, fixed deposits, recurring deposits, and post office savings account are considered to be ‘Income from Other Sources’ and are taxable. Thus, it is important to collect the interest certificates pertaining to these, in order to furnish the details of the total interest earned during the financial year.
- Income Tax (IT) Login details: Lastly, you would need your IT login credentials to log in to the official portal and start the e-filing process.