It is very important to file the income tax returns (ITR) this year as the provision of penalty has been imposed for missing the deadline. For easy and swift filing of ITR is necessary to keep the required documents and proofs ready because without them it becomes really difficult for anyone to file ITR.
Apart from penalty, this year the income tax department has also asked the taxpayers to provide the break-up of gross salary income and income earned from one house property during the FY2017-18. Keeping this in mind, below are the 10 important documents which should be kept ready for filing the ITR1 for FY2017-18. These documents also ensure that there are no mistakes made while filing the income tax return.
Form 16 is the most important documents for a salaried person to file ITR. It is a TDS certificate issue by the employer to the employee to provide details of the salary and TDS deducted on it. With Form-16, it is easy to make out the salary break-up which is required in ITR form-1.
There are two parts in Form-16 (A and B). In part A there are all the details of the tax deducted by the employer, PAN (Permanent Account Number) of the taxpayer, PAN and TAN of the employer. In part B, the gross salary break-up details such as exempt allowances, perquisites etc. are mentioned.
PAN mentioned in the Form-16 should be checked properly and in case of discrepancy, this should be rectified by the employer and he should give a revised form.
Salary slips become important as they contain information about the allowances such as HRA (house rent allowance), transport allowance etc. that are taxable. With the help of a salary slip the taxpayer can add each allowance and calculate the taxability portion. It is important to know that each allowance has a different tax treatment. Some of the allowances might be fully taxable, while some might be partially.
For example, any special allowance mentioned in the salary slip will be fully taxable in your hands and transport allowance will be tax-exempt for maximum up to Rs. 19,200 in a year.
Certificates of Interest from Banks and Post Office
As interest on savings bank account, post office savings account, fixed deposits and recurring deposits are taxable, hence the taxpayer should be prompt enough to collect the interest certificates from the bank or post office so as to know the total interest earned if in case there has been no TDS deduction.
In case the taxpayer is not able to collect the interest certificates, he should make sure that account passbook is updates and carries the details regarding the interest credited in the account till March 31, 2018.
Bank issues Form-16A in case the TDS deduction is done on the payments other salaries over the specified limits as per the current tax laws. Form-16A carries the details of the amount of TDS deducted.
The Form-16B is issued by the buyer in case of property being sold which shows the amount of TDS deducted on the amount paid. Similarly, Form-16C will be issued by the tenant to the landlord showing the details of TDS deduction on rent. As per the current norms, the TDS deduction is applicable only if the rent is more than Rs. 50,000 per month. Other details can also be verified through 26AS.
Form 26AS can be seen like the tax passbook which carries complete information about the taxes been deposited against your PAN. It is consolidated annual tax statement. It includes, TDS deducted by employer, TDS deducted by banks in the income from interests is more than Rs. 10,000 in FY, TDS deducted by any other organization for the payments made, Advance taxes deposited in the FY and Self-assessment taxes paid.
Form 26AS can be downloaded from TRACES website. TRACES is TDS Reconciliation Analysis and Correction Enabling System. To download your Form-26AS, you can login to your account on the e-filing website, www.incometaxindiaefiling.gov.in. Once logged in, click on ‘View 26AS (Tax Credit)’ under the ‘My Account’ tab. The website will redirect you to the TRACES website to download the form.
It is important to make sure that all the deductions of taxes in the FY are reflecting against the PAN in Form-26AS. If there is some difference then the deductor should rectify it else claiming tax-credit for that TDS deduction won’t be possible.
Tax-saving Investment Proofs
To lower down the tax liability all the tax-saving investments and expenditures proof under the Section 80C, 80CCC and 80CCD(1) during the Financial Year should be collected at the time of filing ITR. The taxpayer can claim maximum of Rs. 1.5 lakhs in a financial year under these three sections.
Employees Provident Fund (EPF), Public Provident Fund (PPF), Investment in ELSS schemes of mutual funds, Life insurance premium and National Pension Schemes (NPS) are few common available tax breaks under section 80C.
Not only these investments but expenditures like home loan principal repayment, tuition fees of the children etc. can also be claimed for tax-benefits under section 80C.
Deductions under Section 80D to 80U
Not only tax-saving investments and expenditures under section 80C can be claimed there are certain other deductions also which can be claimed under section 80D of the Income Tax Act. This covers health insurance premium paid for the financial year up to maximum Rs. 25,000 in a year.
Apart from tax-saving investments and expenditures under section 80C, there are certain expenses on which you can claim deductions under different sections of the Income-tax Act. For instance, health insurance premium paid in the FY 2017-18 is eligible for deduction under section 80D of the Act for maximum up to Rs 25,000 in a year.
Also, interest on the education loan can be claimed under section 80E where there is no maximum limit on the amount of interest paid.
Home Loan Statement from Bank or NBFC
It is very important to collect the loan statement in case the taxpayer has taken a home loan from any bank or other financial institution as it provides the details of principal and interest repaid by the taxpayer. This lowers down the tax liability under section 24 maximum by Rs. 2 lakh.
If you have earned some capital gains from the sale of property and/ or mutual funds, then you will be required to report these gains in your ITR.
One should remember that equity shares and equity-oriented mutual funds sold on or before 31 March, 2018, after holding them for more than a year, will remain exempt from tax. From April 1, 2018, sale of equity shares and equity-oriented mutual funds, held for at least a year, will be chargeable at the rate of flat 10 percent if gain amount exceeds Rs 1 lakh. However, capital gains accrued till January 31, 2018 will be grandfathered as per the new rules.
Providing Aadhaar details is mandatory to successfully file your ITR. According to section 139AA of the Income-tax Act, an individual is required to provide his/her Aadhaar details while filing the return of your income.
If you have not received your Aadhaar card yet but have applied for it, then you would be required to provide an enrolment ID in your tax returns.