If your annual income is greater than Rs. 2.5 lakh per annum, you will want to file income tax returns. The returns should be filed before the deadline i.e., 31st July every year. If you are filing returns for Assessment Year 2018-19, the last date to file returns is July 31st 2018. You should choose the right kind of ITR form and should have access to various kinds of documents to file an error-free income tax returns. By filing returns before the due date, you will not attract penalty by the income tax department.
If your income tax return was selected for scrutiny, you will want to provide the following documents to the assessment officer. Hence, you should procure and preserve the documents up to 10 financial years.
The following documents are important/essential to file your income tax returns:
- Form 16
- Form 26AS
- Bank Statement
- Interest certificate from Banks and Post Offices
- Tax-saving documents (as proof)
- Home Loan Statement
- Capital Gains Statement
- Documents to prove deductions (Section 80D to 80U)
- PAN Card
- Aadhaar Card
#1. Form 16
Form 16 is also called as TDS certificate. It is a document provided by the employer to the employee. The certificate contains the information about the salary paid to the employee during the previous financial year. Form 16 has the TAN and PAN of the employer. The information furnished in the document should be provided in the income tax returns. There should not be any mismatch between the information present in Form 16 and the ITR form.
#2. Form 26AS
It is an annual tax statement generated by the income tax department automatically. You can access the document by your online bank account or the income tax website (after logging in with your credentials). The tax deducted on your behalf by the employer, bank, tenant and others will be credited under your PAN number. These details will be reflected in Form 26 AS. The document can be downloaded in either PDF or excel sheet format for your convenience. While filing income tax returns, you should ensure that the information in Form 26AS should match with the ITR form.
#3. Bank Statement
You should have access to the previous financial year’s bank statement. If you have more than one account in your name, you should get access to all those statements. You can get a soft copy of your internet banking account or you can request a physical copy from your bank. The bank statement will help you find out the salary, interest income posted on various dates. The income calculations can be done very easily when you have access to the document.
#4. Interest certificate from Banks and Post Offices
To know the total income generated by the savings account, fixed deposit accounts and recurring deposit accounts, you should get respective certificates from the post office or bank.
The interest received on savings account (either bank or post office) is exempted from the income tax up to Rs. 10,000 in a financial year. You can claim deduction under Section 80TTA of the income tax act.
The interest earned on fixed deposits and recurring deposits should be added to the regular income and you should pay tax on the income as per your income tax slab.
If the interest generated on your fixed deposit in a bank is greater than Rs. 10,000 per annum, banks will deduct 10% of the interest amount as TDS. The deducted amount will be credited to the income tax department and the details will reflect in Form 26AS.
If the bank deducts the amount on the fixed deposit interest and fails to credit to the income tax department, you should contact the bank to update the records at the earliest.
If your income is less than the taxable income, you can claim the money deducted by the bank (under TDS) by filing the income tax returns. The income tax department will verify your Income Tax Returns and refund order will be issued to the taxpayer.
Taxpayers falling under higher income slabs should pay the difference amount to the income tax department. For example, if your income tax slab is 20%, you should pay 10% additional amount on the fixed deposit returns along with applicable taxes. If there is a delay in payment of the tax, you should pay the interest as well as per the terms and conditions of the income tax department.
#5. Tax-saving documents
You should get access to various tax-saving instruments and expenditures subscribed by you.
The following documents are important:
- Life insurance premium
- Tax-saving mutual fund schemes (ELSS)
- Health insurance premium
- Home Loan Statement
You should in possession of tax-saving documents under various sections of the income tax. You will get an exemption from the tax up to Rs. 1.5 lakh per annum by investing in various products under Section 80C of the income tax act. Life insurance premium, home loan principal amount, EPF, PPF, NPS, ELSS and other documents will help you in filing the tax returns very easily.
The investment and expenditure details can be filled under respective columns in the ITR form very easily.
#6. Home loan statement
The home loan statement can be obtained from your bank. The statement contains the total loan amount paid by the customer. You can find the amount paid as principal as well as interest to the bank. Hence, the amount can be entered in ITR form under respective fields very easily by going through the home loan statement.
#7. Capital Gains Statement
If you had invested in stocks and mutual funds, you can obtain the capital gains statement from respective DP (Depositary Participants) or mutual fund house.
The capital gains statement will contain the STCG (Short-Term Capital Gains and LTCG (Long-Term Capital Gains) gains you made in the previous financial year.
The tax on STCG gains should be paid @ 15% and the tax on LTCG gains should be @ 10%. You should pay LTCG gains on equity stocks and mutual funds if the profit made in one financial year is greater than Rs. 1 lakh.
If you make losses by investing in the stock market, the losses can be carried forward by entering the details in the respective fields of the ITR.
#8. Documents to prove deductions (Section 80D to 80U)
It is possible to claim deduction under Section 80D to 80U under various sections of the income tax act. Hence, you should be in possession of these documents (either in soft or hard copy) so that the information can be entered in respective fields in the ITR form very easily.
The health insurance premium up to Rs. 25000 per annum is exempted from the income tax. For senior citizens, the exemption limit is Rs. 30,000 per annum.
#9. PAN Card
PAN card contains the basic information about the taxpayer. It contains your name, father’s name, date of birth and PAN (Permanent Account Number). If you are filing the returns for the first time on the income tax website, you should furnish the information carefully. For subsequent years, the information will be populated automatically. Hence, you can verify the fields and alteration can be done (if required).
PAN is mandatory to file income tax returns. If you do not have a PAN Card, you can apply for the same on the income tax of India website.
If you have registered your phone number with the UIDAI, you can utilize the e-PAN facility also wherein the PAN number will be generated instantly by accessing your Aadhaar details.
#10. Aadhaar Card
It is the unique identification card issued by the Government of India. The document will be issued for people living in India. It contains the name of the person, date of birth, address and phone number. You can find 12-digit unique number as well on the card. You should be in possession of Aadhaar card to file income tax returns.
The salary slips will help you in calculating the savings and expenses under various heads. You can claim exemption under EPF, NPS and PF, LIC, health insurance premium, education loan, house rent allowance, transport allowance, and other heads very easily by going through your salary slips. You will be able to verify the information in Form 16 and Form 26 AS by going through your salary slips.
Why should you file income tax returns?
Salaried employees, professionals, freelancers should use an individual income tax return Form to file income tax returns.
Filing of ITR is mandatory if your income in a financial year is more than Rs. 2.5 lakh per annum. The limit is Rs. 3 lakhs per annum for senior citizens (above 60-year old).
Even though your income after applying the exemptions is not taxable, you should file returns if the total earning cross Rs. 2.5 lakh (for the general public) and Rs. 3 lakhs (for senior citizens).
The income tax department will give you enough time to file your income tax returns. The last date to file income tax returns is July 31st for the previous financial year.
Failure to pay the income tax will lead to penalization by the income tax department and you may be prosecuted.
Benefits of filing ITR
Income proof – By filing ITR, you will manage income proof certified by the Government of India. You can apply for bank loans by showing ITRs as proof of income.
Emigration clearance – If you are planning emigration, visa officials would like to go through your tax credit statements. If you do not have any dues to the income tax department, the visa processing will be done quickly and there will not be any further issues.
Change of profession – If you would like to change your profession from a ‘salary employed’ to ‘development of new business’, you should file income tax returns.
Deductions under Section 80C
There are various kinds of tax exemptions available under Section 80C of the income tax act. Hence, you can have the following documents as proof of investment or expenditure:
- PPF (Public Provident Fund) – It gives the information about your contribution to the fund from the salary
- NPS (New Pension Scheme) – The money deducted from your salary account toward the pension fund. The contribution made by self-employed also can be claimed as deduction under Section 80C
- NSC (National Savings Certificate) – The investment made towards NSC is exempted from income tax up to Rs. 1.5 lakh per annum.
- Life insurance premium – The insurance premium paid for the protection of self and dependents can be claimed under Section 80C.
- The tuition fee paid for children is exempted for the tax up to Rs. 12,000 per annum for one child. You can get exemption up to a maximum of two children.
- Home loan principal amount – The home loan principal amount up to Rs. 1.5 lakh is exempted from the income tax.
- Home loan interest – The interest on home loan up to Rs. 2,00,000 per annum is exempted from income tax.
- Tax-saving fixed deposits
- ELSS – Investment in tax-saving mutual funds up to Rs. 1.5 lakh per annum
- Subscription to notified bonds of NABARD
- Medical treatment for physically challenged persons up to Rs. 75,000 (with 45% to 80%) disability and Rs. 1.25 lakh (with more than 80% disability)
- Education loan for self and dependents can be claimed under Section 80E of the income tax act.
- The donations made to charity and social services under Section 80G will be exempted from the income tax up to 100%.
- The royalty income up to Rs. 3 lakhs per annum is exempted from the income tax under Section 80RRB
- Interest on savings accounts up to Rs. 10,000 is exempted under Section 80 TTA.
You can file individual income tax return very easily by being in possession of requisite documents. By providing accurate information in ITR, the processing will be done quickly and you will not want to submit the further clarification to the income tax department. You can also claim refund very easily.