Best Tax Planning process for easier ITR Filing

As Financial Year Ending / March Ending is near – one can see people getting busy collecting the required data and documents to ease the process of Tax Planning. Given below is 12 points check list which might be required by the tax payer to keep it handy:

1.PAN Card: Entering your PAN card number has been made mandatory while filing your returns.

2. Bank account details: An individual must provide the details of all the bank accounts held while filing ITR. The following details have to be entered:

• Bank name
• Account number
• Account type
• IFSC code

Make sure to provide correct details so that the refund, if any is easily processed.

3. Capital Gains Statement: Capital gains from property sale, mutual funds, and equity shares have to be notified to the income tax department through ITR. Purchase deed and sale deed are necessary to file the income received from selling a house. In the case of mutual funds and shares, one must have the statement from fund houses and/or brokers. For those who file ITR-2, the details of the buyer must be entered, such as name, PAN, and address. Capital gains from equity shares and equity-oriented mutual funds are taxable at 10% if it exceeds Rs.1 Lakh for Financial Year.

4. Details of unlisted shares: Even if the source of income for a taxpayer is salary, he may hold shares of an unlisted company. In this case, it is mandatory to file ITR-2. The details of the investment along with the PAN of the company have to be submitted, such as:

• Opening balance
• Shares acquired during the year
• Shares transferred during the year
• Closing balance

5. Form 16 : If the employer has deducted tax from the salary, it is mandatory to provide Form 16. The employer issues Form 16 also termed as TDS (Tax Deduction at Source) certificate. Form 16 consists of two parts viz. Part A & Part B. Part A has the details, such as the tax deducted from the salary by the employer, Permanent Account Number (PAN) of the employee, and PAN and TAN of the employer. Similarly, Part B consists of the information regarding salary break-up, such as exemption allowances and prerequisites. Taxpayers can either fill the details manually or upload Form 16 and file their ITR.

6. Form 16A/Form 16B/Form 16C : Form 16A is issued by the bank for tax deducted from income sources such as fixed deposits.     Form 16B is issued by the buyer upon selling property where it states the tax deducted on the paid amount.  Landlords get Form 16C from their tenants stating the tax deducted on the rent received. Form 16C is mandatory for monthly rents above Rs.50,000.

7. Form 26A S : It is a consolidated statement which includes details on all the taxes that has been deposited to your PAN, such as:

• Tax deducted by the employer
• Tax deducted by banks
• Tax deducted by other organizations based on the payments made to you
• Advance taxes deposited
• Self-assessment taxes paid

The form is available for download from the TRACES website.

8.Home loan statement: It provides break-up details of the principal and interest an individual has repaid to the bank towards a home loan. The document acts as a proof as well as source of information while filing ITR. Under Section 24, the interest paid to the home loan can reduce the tax liability allowing a tax claim of up to Rs.2 Lakh. Details on the interest paid and the rent received (if any) must be entered in the ITR form.

9.Interest certificates from banks and post office:These documents are necessary for taxpayers to collate the interest income earned from savings accounts and/or fixed deposit accounts. Taxpayers must ensure correct reporting of the interest income in the ITR. Hence, it is appropriate to obtain interest certificates from banks or post office to know the actual interest earned. If you fail to get the interest certificate, you have to get your passbook updated so that you can get to know the interest credited to your account during the financial year.

10.Pre validation of Bank accounts for ECS refund: From March 1, 2019, the income tax department will issue only e-refunds. Such refunds will be remitted to the bank accounts that are linked to PAN. It is necessary to pre-validate a bank account with PAN before filing your ITR.

11.Tax saving investment proofs: One has to keep all the investment proofs handy of all the tax-saving investments like 80C, 80D and 80E made by the taxpayer during the Financial Year which will have to be reported in the income tax returns. A taxpayer can claim up to Rs 1.5 lakh in a financial year if he has invested in options under section 80C like EPF, PPF, tax-saving mutual funds, life insurance, NPS and so on. Also, health insurance premiums paid for self, spouse, and/or children are eligible for tax deductions under Section 80D for a maximum amount of Rs.25,000. Insurance premiums paid for parents can bring in an additional deduction of up to Rs.50,000 under section 80D.

12. Updated bank, post office, and PPF passbook: It is recommended to keep the passbooks of bank, post office, and/or PPF up-to-date before filing ITR. It becomes easier to report the details of income, such as dividend and interest with the updated passbooks.

Taxpayers must check if personal and monetary details are appropriately recorded such as taxpayer’s PAN and interest credited. The collation of the above documents and information will ease the tax filing process for a taxpayer. Happy Tax Filling!