Although this year there is enough time to file a tax return, it's smarter to do it early than knocking at the door of your financial consultant to get it done on time. Filing Income Tax Return (ITR) is mandated to all salaried individuals whether falling under the tax slab or not. But apart from this, it is very essential to file ITR correctly in order to avoid rejection and unwanted penalties. Hence, it is smarter to compile all the required documents that are listed below, if you are planning to file IT return now.
1. Form 16
For all salaried persons, Form 16 is the most essential document for filing the ITR. This form is issued by your employer describing the tax deducted source and also contains your salary details and TDS too. An employer is responsible for issuing this mandatory document to all its workers from whom income tax has been deducted during a fiscal year. Form 16 has two parts Part A and Part B. Part A is the section under which you can track the details of the income tax deducted by the employer during a particular fiscal year along with your PAN details and the Tax Deduction Account Number (TAN) of your employer. Part B contains details of your gross salary.
2. Form 26AS
It is an annual consolidated tax statement issued by the Income Tax Department of India. All taxpayers can use it conveniently from the income-tax portal using PAN. This form reflects the tax during the fiscal year and the amount of the TDS of the salaried class. While filing the ITR, taxpayers are required to compile Form 26AS with Form 16 for the amount of taxes they paid to the central government during a fiscal year. Form 26AS can be accessed from the TRACES website, just login to your account on the e-filing website (incometaxindiaefiling.gov.in) and click on 'View 26AS (Tax Credit)' under the 'My Account' section. To download the form, the website redirects you to the TRACES website.
3. Tax Saving Investments
In order to claim tax deductions, an individual has to submit the proof of the same straightly to the IT Department, if he / she has failed to report their tax-saving contributions to their employers within the time specified in the previous fiscal year. This also reflects the receipt of Public Provident Fund (PPF) passbook, 5-year FD receipts, mutual funds investments, LIC premium paid, paid tuition fee and more.
4. Interest certificates
Interest certificates/bank statements are provided to depositors for the interest earned from various financial institutions such as savings account deposits and FDs from banks post offices, apart from salary. An investor can claim a deduction of up to Rs 10,000 on the interest earned from a bank / post office's savings account Under section 80TTA of the Income Tax Act.
If TDS is deducted from payments other than wages such as interest earned from FDs, RDs etc, within the defined limits according to income tax rules, the bank will issue you Form-16A (in the case of fixed deposits) which includes the specifics of the amount of TDS deducted during a fiscal year. In case, you have sold your house, the purchaser will provide you Form-16B stating the deducted TDS on the amount you earned.
If you are a homeowner who receives monthly rental income then you should ask your tenant to furnish you with Form-16C for specifics of the TDS deducted from the rent you earn. As per current legislation, if the monthly rent is more than Rs 50,000, an individual is required to deduct TDS. Form 16D is a TDS certificate given to contractors or experts if the individual / HUF 's payment to them during the fiscal year surpasses Rs 50 lakh. The tax is withheld only at the period of a commission, purchase, contract compensation or fee is charged for the profession.
6. Documentary support for claiming deductions under Sections 80D to 80U
Besides tax-saving investments and investments under section 80C, there are some expenditures for which you can request deductions under various provisions of the Income-Tax Act. For example , the health insurance premium charged for self, spouse and/or children in a FY is liable for deduction for up to a limit of Rs 25,000 in a year under section 80D of the IT Act. In case you have compensated the health insurance premium of your parents, then depending on your parents' age, you can claim an additional deduction of Rs 25,000 (if age is below 60 years) or Rs 50,000 (if age is 60 years or above). In case your parents are not covered by any health insurance, you can claim a deduction for the healthcare costs compensated under section 80D. Additionally, you can claim deduction under section 80E if you have paid any interest on the education loan. No upper cap is imposed on the amount of interest accrued on the education loan. You need an interest paid certificate from the bank from which you have borrowed the loan in order to claim this deduction.
7. Statement of Home Loan from NBFC/Bank
It is essential to collect the loan statement if you have taken a home loan from a bank or any other financial institution during a fiscal year. Home loan interest paid can limit the tax liability under section 24. Under section 24 the maximum amount that one can claim is Rs 2 lakh. You need to include the amount of interest paid in the ITR form as well as the rental income received out of that house. If that same property is used for self-occupation purposes, then you can also request deduction under section 24. You will be required to specify the category of property as self-occupied, let-out or deemed let-out when filing ITR.
8. Capital Gains
You will be required to report these gains in your ITR if you have received any capital gains from the selling of property and/or mutual funds / equity shares. To determine capital gains on the selling of home, land or property (long-term or short-term) one will need the purchase deed and sale deed of the same asset. In the case of capital gains obtained on the selling of mutual funds and/or shares, declarations from houses and/or brokers of the mutual funds will be required. Please keep in mind that while disclosing capital gains from property sales in ITR-2, you need to specify the complete details of the buyer.
9. Pre-validation of bank account for ECS refund
Income tax department has announced it will issue only e-refunds as of March 1 , 2019. Such refunds are allocated to those bank accounts that are linked with the PAN. You are therefore required to pre-validate your bank account and to link your bank account to PAN, if any, to collect income tax refund.
10. Aadhaar Card
To file your ITR correctly, it is mandatory to have Aadhaar info. It is mandatory for an individual to provide his / her Aadhaar details while filing ITR according to section 139AA of the Income-tax Act. You can provide the enrolment ID in your tax return if you have not yet issued your Aadhaar card yet.
11. Specifics of the investment in unlisted shares
If you've invested in an unlisted company's stock then this year you 're required to include all the information of the same when filing ITR-2. However, if your revenue stream is salary, but you own an unrated company's shares, you are required to file ITR-2. You will have to provide PAN details of the company while filing ITR-2.
12. Bank account details
You're also needed to disclose all bank accounts operated by you when filing your ITR. The details of your bank accounts that is required are: bank name, account number, account type and IFSC code.
13. Salary slip
While filing ITR 2 it is required to provide your salary slip as per the regulations of income tax department, which contains the specifics of your nature of income.