ITR Filing: Keep These Documents Handy To Ensure A Smooth Tax Filing And Refund Process

In order to file your ITR properly and well on time before the due date, collate the proofs of various investments and expenses that you can claim as tax deductions, such as home loan interest certificates, donation receipts, and medical and life insurance premium receipts, among others
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ITR Filing, Tax Filing, Documents, Refund

June is already here and there’s less than two months left to file your income tax return (ITR) – the last date of filing being July 31, 2024. Therefore, it’s important that you are well acquainted with the documentation process so that your ITR filing process is smooth, hassle-free and you do not end up filing a revised ITR at a later date for having missed out on some vital detail at the time of filing your return.

As the ITR process tends to be complex with lots of technicalities, it is important that you are well-versed with all the required documents from which you might need to fill up data in the ITR form while filing your tax return. This will help you avoid errors during the return filing process.

What All You Need To Do

The first step in the ITR filing process is to determine your residential status based on number of days of stay in India and other criteria (such as citizenship, leaving India for employment, etc.) and choose the correct tax return form (ITR 1, ITR 2, etc.) based on residential status, sources of income, range of income (up to Rs 50 lakh, etc.).

Says Sudhakar Sethuraman, partner, Deloitte India: “The tax authorities already provide significant data in a summarised form. For instance, Form 26AS captures details of income (salary, interest, etc.), corresponding tax deductions in addition to tax collections at source, advance tax, etc. Apart from this, the annual information statement (AIS) provides details of other transactions, such as sale of securities (shares, mutual funds, and so on), rental income, and interest income from deposits as well as savings account.”

Taxpayers can download these forms along with the pre-filled ITR utilities, and compare the entries with the other documents available to them (for instance, interest reported in AIS can be compared with the interest certificate issued by the bank, capital gains transactions reported in AIS/taxpayer information summary (TIS) can be compared against their own record of purchase and sale of shares and other securities). Likewise for tax deducted and/or collected at source, etc.

Says Sethuraman: “Taxpayers also need to keep track of transactions during the year which may not be reflected in Form 26AS. For instance, gifts received, overseas assets, and financial interest (such as shares held outside India) need to be disclosed in the ITR.”

Akhil Chandna, partner, Grant Thornton Bharat, says that individuals must ensure that their Permanent Account Number (PAN) is active and linked with their Aadhaar, while their bank account should be enabled on the income tax portal and should be properly validated.

“They should also know and consult their tax advisors about the applicable ITR forms to avoid the need for filing rectifications later receiving an invalid return notice from the tax department,” adds Chandna.

Also read: ITR Filing: Know About New Feature Of AIS Form And How It Will Benefit You

Documents Needed By Taxpayers

Employers are issuing Form 16 to their employees for FY 2023-24. For salaried individuals, this forms an integral part of their ITR.

Adds Sethuraman: “Other documents that taxpayers can collate for this purpose are interest certificates from banks and financial institutions, tax deducted at source (TDS) certificates issued on other incomes, tax collected at source (TCS) certificates, capital gains statements from demat accounts, documents evidencing payments that are eligible for deductions and exemptions (such as property tax paid on house property, home loan certificates showing interest and principal repayment, life insurance premium receipts, etc.)”

Says Rahul Singh, senior manager, Taxmann, tax and corporate advisor, “The following documents should be kept handy while furnishing ITRs: Income and TDS proofs, such as Form 16, Form 16A, and other TDS, TCS certificates issued by tax deductor or collector, and bank statements to verify interest income and other transactions.”

“Investment proofs, such as premiums paid for life insurance, contribution to Public Provident Fund (PPF), etc. are required for claiming deduction under Section 80C of the Income-tax Act, 1961. Medical insurance premium receipts are meant for claiming deduction under Section 80D. You will also need a home loan statement if you are claiming deduction of home loan interest and principal repayment on your home loan. Also get a profit and loss statement (P&L) account from your stock broker to report capital gains or losses incurred during the year. Having these documents ready will ensure a smooth and accurate ITR filing process,” adds Singh.

Moreover, after filing your ITR, you must ensure that it is verified within 30 days of uploading. An unverified return is considered valid and will not be processed for issuing refunds.

Says Singh: “The income tax department does not process unverified returns. If an assessee fails to file his/her ITR by the due date, he/she cannot carry forward any business losses. However, losses under ‘house property’ can still be carried forward even if the return is filed late. The income tax department doesn’t issue a tax refund if you haven’t pre-validated your bank account on the e-filing portal. Thus, it is mandatory that taxpayers pre-validate their bank accounts on the e-filing portal to enable direct crediting of tax refunds. This will ensure that the account is active and owned by the taxpayer, thereby minimising errors and fraud.”

Forms Taxpayers Must Have

Singh says that before filing the ITR, it is crucial to determine the filing status and select the appropriate ITR form.

“For instance, ITR-1 is not applicable if you are a company director, hold unlisted shares, or if your total income exceeds Rs 50 lakh. Therefore, the most important initial step is choosing the correct ITR form based on the type and nature of your income. Filing your ITR using the wrong form will render your return invalid,” he says.

In case taxpayers find any incorrect entry in their AIS, they can provide feedback by disagreeing with the information reported therein. Consequently, the tax office would verify the information provided by the source (banks in case of interest). This would ensure that any discrepancy is corrected, thereby ensuring a faster processing of your ITR.

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