Documents required for ITR Filing

As the financial year ends in India on March 31, individuals and businesses gear up to file their Income Tax Return (ITR). Hopefully, this year the government may extend the ITR filing deadline which usually ends on July 31 due to the coronavirus outbreak.

Even if the filing deadline is extended, it’s important for taxpayers to remain prepared, especially with all the documents required for ITR filing. Keeping in mind the importance of having all the documents at your disposal before filing income tax return, here we will walk you through some key ITR filing documents that you should keep handy.

It’s very important that all the documents required for income tax return are ready because the IT department’s e-filing portal won’t allow you to save your work and then resume again later. In case any of the ITR filing documents is missing while you file the return, you’ll have to start all over again. Therefore, to save time and compliance headaches it’s very important to ensure that all the documents required for ITR filing are ready. Here a checklist of ITR filing documents to help you.

1. Form 16:

Form 16 is the “Holy Grail” for salaried individuals. Usually, your employer should provide you the Form 16 before May 31^stof every year. It contains the breakdown of tax deducted at source by your employer from your salary. If you have no other sources of income, you can just upload Form 16 to the IT department’s website or use a free online vendor to automatically prepare your returns. Ensure that you have this ready before you file your income tax return if you are a salaried worker.

2. Interest certificates:

If your savings account or fixed deposit account is earning interest, you need to get hold of the interest certificate from the bank or post office. Under section 80TTA of the Income Tax Act, interests earned up to Rs. 10,000 for individuals and up to Rs. 50,000 for senior citizens in a year are tax-free. Banks usually send these certificates by email. If you don’t receive interest certificates, at least ensure that your savings account passbook shows the interest credited to you.

3. Form 26AS:

Form 26AS keeps a track of all the taxes deposited to the IT department against your PAN during the assessment year. This is one of the most important documents required for income tax return filing. You can download Form 26AS from the TRACES website.

4. Form 16A – 16B – 16C:

These 3 documents required for income tax return is applicable in the following 3 scenarios:

• Form 16A– If you have received income from fixed deposits, shares, and mutual funds, your bank or financial institution will issue a Form 16A. In this case, the bank deducts applicable tax from your income and issues Form 16A as a TDS certificate.
• Form 16B– If you have sold a house or property, the buyer deducts TDS from the total amount and issues you Form 16B.
• Form 16C – If you are earning a rental income of more than Rs. 50,000 per month, you need to furnish Form 16C.

5. Investment proofs:

If you have opted to avail tax deductions for your investments in section 80C, 80D and 80E instruments, ensure that all your receipts and certificates are ready before you begin filing your ITR returns. You can keep ready ITR filing documents related to investments in term insurance, traditional life insurance, health insurance, tax saving mutual funds, PPF, ULIPs, bonds, etc. Make sure to keep the proofs of premium handy so it’s easy to upload or to mention details on the ITR portal

6. Home loan payments:

Keep your home loan statement ready before filing your income tax return. The statement should include all details such as payments made on the principal, interest payments. If you have taken a home loan, you can claim tax deductions up to Rs. 2 lakh in a year on interests paid. Make sure that you don’t miss claiming this deduction.

Apart from these, you also need to report long- and short-term capital gains made on the sale of property, stocks, mutual funds and other assets and securities. This can be done through a statement of capital gains provided by your broker or financial institution. And yes, don’t forget your Aadhaar card, PAN card and always ensure you are providing accurate bank details for refunds.

Make sure that you are dealing with a reputed brokerage house or financial institution when it comes to your investing, trading and managing money. Angel One, which is one of the largest independent full-service retail broking houses in India, can help you make informed investment decisions with detailed research and regular reports.

Other Investment-Related Documents Required for Filing ITR

For claiming tax deductions under sections 80C, 80D, and 80E, gather receipts and certificates for your tax-saving investments. This includes proof of payments for instruments like PPF, ULIPs, mutual funds, and premiums for health and life insurance policies. Don’t forget about bonds! Having these documents readily available, whether for uploading or referencing details on the ITR portal, ensures a smooth filing process. Remember, these documents are crucial for verifying your tax-saving investments and claiming rightful deductions.

Importance of Choosing the Right ITR Form

Selecting the appropriate ITR form is crucial for a smooth and accurate tax filing experience. The Income Tax Department offers various ITR forms designed for specific taxpayer categories and income sources. Choosing the wrong form can lead to a cascade of issues, including:

• Processing Delays: If you haven’t used the designated form, the ITR department might take longer to process your return. This can delay your tax refund or create unnecessary inquiries.

• Discrepancies and Errors: Using an incompatible ITR form can lead to inconsistencies in your tax filing. This could raise red flags and require additional clarifications or corrections, extending the filing process.

• Rejection of ITR: In worst-case scenarios, submitting your ITR in the wrong format can lead to outright rejection. This necessitates filing a revised return with the correct form, causing unnecessary hassle and potentially missing crucial deadlines.

To avoid these complications, it’s vital to carefully review the eligibility criteria for each ITR form. The Income Tax Department website provides detailed information about each form and who should use it. By understanding your income sources, investments, and tax liabilities, you can select the ITR form that accurately reflects your financial situation.

Importance of Linking PAN with Aadhaar

The Income Tax Department recently emphasised the importance of linking your PAN card with your Aadhaar number. This initiative aims to streamline tax filing and prevent higher deductions at source (TDS).

Why Link Your PAN with Aadhaar?

• Avoid Inoperative PAN: A PAN not linked to Aadhaar by the deadline risks becoming inoperative. This can significantly disrupt your financial activities, as a PAN is required for filing taxes, receiving refunds, and many other transactions.

• Ensure Timely Tax Refunds: Unlinked PANs can delay or even prevent tax refunds you’re entitled to receive. Linking your PAN with Aadhaar ensures a smoother and faster refund process.

• Prevent Higher Tax Deductions: Failing to link your PAN with Aadhaar can lead to higher TDS (Tax Deducted at Source) rates on various financial transactions and income sources. This means a larger chunk of your income might be withheld upfront, potentially impacting your cash flow.

• Streamline Tax Filing: Linking PAN with Aadhaar simplifies tax filing by pre-populating your tax return with relevant information from Aadhaar. This reduces the risk of errors and saves you time during the filing process.

Conclusion

Filing your Income Tax Return (ITR) doesn’t have to be a daunting task. By gathering the necessary documents beforehand, you can ensure a smooth and efficient process. Keep essential documents like Form 16 (for salaried individuals), bank statements, investment proofs, and home loan statements readily available. Remember to link your PAN with Aadhaar to avoid delays and ensure timely tax refunds. Selecting the appropriate ITR form based on your income sources is crucial. With the right preparation and resources, you can navigate tax filing with confidence.

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