As the deadline to file income tax approaches closer, individual tax payers must be scurrying for necessary documents that are required to file an income tax return. There are a number of documents that are indispensable for an individual tax payer — particularly for a salaried person — before they file their tax return.
First and foremost, they need form 16 that is issued by the employer. Then there is form 26AS which captures the information for tax deducted at source during the financial year. Besides these, tax payers must arrange proof of investments such as deductions allowed under section 80C as well as the statement of capital gains.
But arranging these documents doesn't mean they need to upload any of those documents.
"It is highly recommended to file your ITR, in case you feel that total income is more than ₹2,50,000. For that, one must arrange the documents to avoid any miscalculation of tax payable,” says Neha Nagar, CEO of Taxhelp.in.
Let us talk about these documents one by one:
Form 16: It is given to all salaried persons whose tax has been deducted by the employer. It is a tax deducted at source (TDS) certificate which states all the key details of amount of salary paid, tax deducted and deposited during the financial year.
Interest certificate: It is a summary of the interest credited in an account. It enables an account holder to find out how much interest they have earned on saving account balance in current and savings accounts, FD and recurring deposits.
It is worth pointing out that interest earned in the savings account up a threshold of ₹10,000 is not taxable. And if the interest income from all fixed deposits with a bank is lower than ₹40,000 in one year, the bank can’t deduct TDS. This limit rises to ₹50,000 for senior citizens.
“Taxpayers must be careful not to forego the payment of income tax in case interest income exceeds the threshold of ₹10,000,” says Deepak Aggarwal, a Delhi-based CA and financial advisor.
Form 26AS: This statement summarises the sum of tax paid in a financial year, and the amount to be refunded. It is a single statement indicating tax liability.
It reveals the details of tax credit in the taxpayer’s account, which include TDS, TCS, and tax paid in other forms such advance tax and self-assessment tax.
Investment-related documents: The taxpayer must arrange the relevant proof of tax-saving investments and expenditures before they file income tax return. An individual can claim deduction from tax-saving investments on choosing the old tax regime at the time of filing ITR.
In the new tax regime, no exemptions are allowed but the tax is levied at a lower rate of interest.
There are series of investments for which one can claim deduction such as EPF, life insurance premium, ELSS, NSC, PPF and ULIP. Before filing the tax return, it is vital for taxpayer to keep the investment related documents ready.
Capital gains: At the time of filing ITR, taxpayers are supposed to disclose the capital gains earned on a number of assets such as property, shares or mutual funds.
One must be apprised of the fact that individuals who have to include capital gains must file their tax returns in ITR-2 or ITR-3, instead of ITR1. For mutual funds, capital gains statement can be obtained from the fund house.