As the tax return filing deadline (ITR) approaches, there are concerns about missing the July 31 deadline. However, things could become much easier if you organize the important documents required to file the ITR in advance, as last minute errands can unnecessarily delay the process. Additionally, filing a tax return without reconciling it with the proper documents may result in under-reporting that may result in notices from the income tax department later.
“Many taxpayers may have gotten their Forms 16 and 16A. The filing date for the return is now July 31, 2022. There is a lot of confusion among taxpayers about what documents need to be collected for ITR filing. Indeed, filing a tax return without reconciling it with the appropriate documents leaves room for reporting errors or under-reporting. Therefore, if you are unsure of the details to be completed in the tax return, you should refer to the instructions issued with the tax return form. Any misinformation can trigger investigations by the Revenue Service,” says Neeraj Agarwala, Partner, Nangia Andersen India.
Although electronic filing of returns online makes it easier to file your returns, the pre-populated information is not always sufficient to process the return. Therefore, it is advisable to keep the documents handy before you start filling out your tax return. The required documents would depend on your source of income, adds Agarwala.
Also read: Tax Returns: How to File an ITR Online for AY 2022-23; follow these rules step by step
What documents should be prepared before filing an ITR?
“A lot of it depends on what type of income you have in addition to your wage income. Some people have income from home ownership, capital gains income, etc. while almost everyone has interest income in a savings account, although the amount may be less,” says Sujit Bangar, founder of Taxbuddy.com.
Here is a comprehensive checklist of documents for a smooth reconciliation and filing of your tax return:
1. PAN card: The Permanent Account Number, or PAN, is a 10-digit alphanumeric number used to track your financial transactions. Banks may also withhold tax at a higher rate of 20% if you do not provide your PAN. Only 10% is deducted if the bank has your PAN details.
2. Adhar: Aadhaar is a 12-digit numeric code used to establish identity based on demographic and biometric information. It is issued by the Unique Identification Authority of India (UIDAI) of the Government of India for the purpose of verifying identity. The Aadhar card also allows your ITR form to be verified electronically provided that your mobile number is registered in the Aadhaar card database.
3. Form 16: Form 16 is a certificate issued by employers to their employees which shows that the TDS was paid on salary by the employee and that it was filed with 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 such as name, address of employer, employer’s TAN and PAN, employee’s PAN and monthly withholding tax details, among others. Part B gives the breakdown of salaries as well as deductions and calculations.
4. Form 26AS: Form 26AS is issued by the Income Tax Department and is an annual tax statement, which contains details of tax deducted from you, withholding tax paid and refunds from which you have benefited. People often misreport or under-report their income. Therefore, it is always advisable to reconcile your income reported in ITR with Form 26AS.
5. Annual Information Statement (AIS): The AIS is more comprehensive than the existing Form 26AS, which only provides information relating to tax withheld at source (TDS) and tax collected at source (TCS). It is a unique reference document for taxpayers, which provides complete and detailed information relating to salary, dividends, interest on savings accounts and deposits, transactions in securities and mutual funds, debt transactions off-market, remittances abroad, etc.
Also read: How to choose the right ITR form to file your declarations? all you need to know
6. Bank statements: It is advisable to have already downloaded the bank statements for the financial year so that you already know the interest and other income credited to your account. “For added security, just take a look at your bank statement so you don’t miss any interest income,” Bangar adds.
7. Bank interest certificates: You should also have interest certificates from banks for easy calculation of the total interest income credited to your account during the year. It is important to note that under Section 80TTA of the IT Act, a person can claim a maximum deduction of Rs 10,000 for interest earned on all savings and time deposit accounts held with a bank, a cooperative bank or a post office.
8. Mortgage Interest Certificate: If you have taken out a home loan, upload the Home Loan Interest Certificate which details the amount you can claim as a deduction under Sections 80C and 24B of the Income Tax Act. Under Section 80C, you can claim maximum Rs 1.5 lakh as principal deduction 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. Statement of capital gains/losses: If you made a profit from the sale of stocks, mutual funds, gold, or a house, you must pay a capital gain on the profit made. To find out the amount of the appreciation, download the appreciation statement from the website or app of the broker or Registrar and Transfer Agents (RTAs) such as CAMS and KFintech.
For example, if you invested through Zerodha, you can download the capital gains statement online through their app or website. The statement shows capital gains for trades made through this broker or RTA. To make filing taxes easier, many online platforms offer the ability to automatically read tax returns for capital gains. “Also, you should keep the property’s bill of sale on hand so that the accurate capital gain income can be calculated,” Bangar adds.
10. Foreign income: If you earned foreign income during the period and paid taxes in a foreign country on that income, please keep records of the tax payment. “You can claim credit for taxes paid subject to India’s Double Taxation Avoidance Agreement with that country. If you stay on rental, make sure you have a rental agreement and receipts rent for rent paid,” says Bangar.
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