The tax filing season is here, and taxpayers are due to file their income tax returns (ITR) by 31 July 2019. Several information and documents are necessary for the filing of the return. Here’s a guide to the documents taxpayers should keep handy for filing of their income tax return.
Form 16 is an annual salary TDS certificate an employee is provided with which states the salary income and tax deducted for the financial year.
Form 16 consists of 2 Parts – Part A and Part B. An employee can obtain the details relevant to filing the return from Part B, such as the break-up of various components of salary, allowances exempt and deductions allowed. Employees should also verify the tax deductions allowed in Form 16 as per the claims made by them. These details provided in Part B will enable an employee in filling up the salary income details in their income tax return.
Part A of Form 16 consists of details of the employer, employee and employment details such as PAN, address etc. Employees should verify their PAN, name and other details on receipt of Form 16.
Any mismatches found in Form 16 should be brought to the notice to the employer and the taxpayer-employee should obtain a revised Form 16 from their employer.
From the AY 2019-20, salaried taxpayers also need to provide a break-up of the components of salary in the income tax return, for example, house rent allowance. An employee can obtain the details from their payslips of the various allowances forming part of their salary.
Taxpayers who earn income other than salary and suffer TDS on such income would need to obtain TDS certificates in Form 16A, for example, Interest from Fixed deposits. Similarly, taxpayers should obtain Form 16B in case of TDS on sale of immovable property.
In case of other income earned, taxpayers should verify the TDS details and income details with their income receipts/bank statements. In case of any mismatches, taxpayers should inform the deductor and obtain revised TDS certificates.
Form 26AS is an annual summary TDS statement specific to each financial year. In the form, a taxpayer can obtain the details of all the TDS deposited against their PAN. This form will also contain the details of advance tax and self-assessment tax paid by the taxpayer during the financial year. To summarise, the form includes:
- TDS on income from salaries (Form 16)
- TDS on interest income, other income (Form 16A)
- Advance tax
- Self-assessment tax
Interest statements from banks, post office etc.
Taxpayers are required to report income earned by way of interest on the savings bank account, fixed deposits, post office etc.
In the case of savings accounts, taxpayers can compute interest income from their bank statements. However, in case of fixed deposits, taxpayers can compute interest income from their annual TDS statements or Interest statements. Taxpayers are eligible to deduction up to Rs 10,000 against interest earned from savings bank and post office savings account. Similarly, senior citizens are eligible for deduction up to Rs 50,000 against interest earned from deposits with banks and post office.
Various investments are made for tax saving purposes, for example, LIC premiums paid, PPF, NSC, ELSS mutual funds, National Pension Scheme. Taxpayers can claim deduction up to Rs 1.5 Lakh under section 80C, 80CCC and 80CCD(1) for a financial year against these investments.
Taxpayers who make certain payments, for example, housing loan repayment, tuition fees paid for children are also eligible to claim deduction within the overall limit of Rs 1.5 Lakh.
Other deductions from section 80D to 80U
Taxpayers can also claim deductions from section 80D to 80U for payments made towards medical insurance premium, interest on education loan, donations to recognised charitable organisations. The nature and the amount of deductions are specified in the relevant sections. To claim these deductions, taxpayers need to have the documentary proofs for the payments made and fill in the relevant details in the income tax return.
Housing loan statement
The annual housing loan statement provides details of the interest and principal loan repayments. An employee is eligible to claim a deduction for interest payments up to Rs 2 Lakh. Further, an employee can claim a deduction up to Rs 1.5 Lakh within the limits specified under section 80C.
In case of rental income earned from the house property, the taxpayer should report the rental income and claim the deductions, if any for interest payments against the same. In case of loss from house property, the taxpayer is eligible to carry forward loss up to Rs 2 Lakh.
Income from capital gains
In case a taxpayer has made gains from the sale of shares, mutual funds, immovable property etc., then the taxpayer should collate the details of purchase and sale and the cost and net sale proceeds, and report the gains while filing the income tax return.
For the sale of equity shares or mutual funds, the taxpayer would require statements from their stockbrokers or mutual fund houses. From FY 2018-19, gains over Rs 1 Lakh on sale of equity shares or mutual funds are liable to tax at 10%.
Linking of Aadhaar number with PAN
Taxpayers are mandatorily required to provide their Aadhaar number while filing their income tax return. In case of taxpayers who have applied for Aadhaar, they are required to provide their enrolment ID in the income tax return.
Also, taxpayers have to link their Aadhaar with their PAN by 30 September 2019 or before the filing of their income tax return, whichever is earlier.
Bank account details
The Income tax department has mandated validation of bank accounts and linking of the taxpayer’s bank account with their PAN to receive income tax refunds.
Apart from the above, taxpayers are also required to mention in the return the details of all the bank accounts held by them. Details requireda to be filled in are the name of the bank, account number, type of account and IFSC code.
Details of investment in unlisted shares
Taxpayers who hold investments in unlisted equity shares are required to furnish the details of such investment such as the name and PAN of the investee company.
The share investment details consisting of opening balance, shares acquired during the year, shares transferred during the year and closing balance should also be provided.
I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.