Income

ITR documents: 10 documents that taxpayers need to file their tax return

The Income Tax Department has worked to improve the process of filing the Income Tax Return (RTI). This is done by offering pre-filled ITR forms. Individuals can file an ITR online (without downloading a form/utility) or offline (downloading the form/utility and then uploading it to the new Income Tax Portal).

Here is the list of documents you should keep handy when filing your ITR this year.

1.
Form-16

Form 16 is a TDS certificate issued to you by your employer that details salary paid, taxes deducted and deposited during the fiscal year. It is mandatory for an employer to issue Form 16 if taxes have been deducted by him. The deadline for an employer to issue Form 16 is June 15 (unless extended by the government).

Form 16 consists of two parts: Part A and Part B. Both parts must be downloaded from the TRACES portal of the Income Tax Service.

The information pre-filled in the ITR forms under the heading “Salary income” is in line with the information available in Part-B of the Form-16.

2.
Form 16A and other TDS certificates

Apart from Form 16, people should also collect other TDS certificates that are applicable to them. If interest earned on fixed deposits in the financial year 2021-22 exceeds Rs 40,000/Rs 50,000 (for seniors), the bank will deduct tax on it. In addition, the bank will need to issue Form 16A to the individual for the tax deducted. Mutual funds and companies will issue you Form 16A for tax deducted on dividends paid in the financial year 2021-22, provided it exceeds Rs 5,000.

Similarly, those who receive monthly rent of Rs 50,000 or more must obtain Form 16C (TDS certificate) from their tenant. In accordance with current tax laws, tenants paying a monthly rent of Rs 50,000 or more are required to deduct tax from the amount of annual rent paid.

Those who sold land or property in the 2021-22 fiscal year should ask their buyer to provide Form 16B for the tax deducted on the amount. TDS is compulsory if the property is sold for more than Rs 50 lakh.

3.
Interest income and other certificates of interest

ITR forms ask individuals to provide a breakdown of interest income received from different sources such as savings account, term deposits, etc.

It is therefore important to collect certificates of interest from banks, post offices and other financial institutions and report correct details of income in ITR as well as claim tax deductions and exemptions. If the certificate of interest is not available, be sure to update and verify the bank book(s).

The individual can claim a deduction of Rs 10,000 under Section 80TTA for interest earned on the savings account. Interest earned on fixed deposits, recurring deposits, RBI taxable bonds, etc. are fully taxable in the hands of an individual. Thus, one must declare the correct amount in ITR and pay the taxes accordingly. Even though PPF interest is tax-exempt, you must declare it. This year, the ITR forms require individuals to provide details of interest earned on EPF accounts if the annual contribution exceeds Rs 2.5 lakh.

Individuals who paid an EMI home loan/education loan in fiscal year 2021-22 must obtain a repayment certificate from the bank/financial institution to claim tax exemption and deductions. A person can claim a deduction under Section 24 for up to Rs 2 lakh on the interest paid on the EMI home loan. Section 80C is also available on the principal amount of the home loan repaid during the year.

The Section 80E deduction may be claimed for interest paid on the student loan during the 2021-22 fiscal year.

4.
Annual Information Statement

In November 2021, the Income Tax Service launched the Annual Information Statement (AIS). This statement contains details of all financial transactions made by a person during a given financial year.

According to the press release issued by the department in November 2021, “The new AIS includes additional information regarding interest, dividends, securities transactions, mutual fund transactions, information on remittances to the ‘foreigner, etc.’ Additionally, the statement contains details of the taxes filed against your PAN with the government.

Individuals should download and cross-check financial transactions from AIS to ensure that all income mentioned in the declaration is declared in the ITR form as applying to you.

5.
Form 26AS

Individuals should download Form 26AS from the new Income Tax Portal. Form 26AS is like a tax booklet that contains details of taxes deducted and filed against your PAN with the government.

Individuals should cross-check information available in Form 26AS with information available in TDS certificates, certificates of interest. This is because there may be times when the TDS deducted is not reflected in your Form 26AS due to a bad PAN, bad assessment year, etc. You will not be able to claim a credit for tax deducted/deposited if it is not reflected in your Form 26AS.

6.
Tax-efficient investment, proof of expenses

It is important to collect evidence of tax savings investment and expenditure to claim the deduction when filing the ITR. Note that an individual can claim tax-saving investments and expenses if they opt for the old tax regime when filing the ITR. Usually, employees declare and submit all proof of tax savings (if they opt for the old income tax system) to their employers to avoid a higher TDS on their salary. The supporting documents presented are mentioned in part B of form 16. The tax authorities take the information from part B of form 16 and pre-fill it in the ITR form.

However, if you failed to report proof of tax savings, this can be claimed when filing the ITR.

seven.
Capital gains from disposal of property, shares, mutual funds

Capital gains from the sale of property, stocks, and mutual funds must be reported when filing the ITR. According to the forms notified, a person with capital gains cannot file a tax return using ITR-1; he shall use ITR-2/ITR-3, as appropriate. To calculate the capital gains (long-term or short-term) on the sale of a property, land or building, one would need the deed of purchase and the deed of sale of said property. This year, the ITR forms ask the taxpayer for various information relating to the sale of a building, including:

A) Date of purchase and sale of the land/building.

B) Details of the year in which the money was spent on the improvement,

C) Details of acquisition cost and indexed acquisition cost

D) If the property located outside India is being sold, the details of the buyer are required in the ITR form.

Taxpayers who sold shares in the 2021-22 fiscal year can obtain the capital gains statement from their broker. Mutual fund redemptions (stocks and debt) are taxable as capital gains. Taxpayers can obtain the “Capital Gains Statement” from mutual fund companies and/or the Registrar.

Additionally, in fiscal year 2021-22, if you sold bitcoins, the gains from those transactions must also be reported in ITR.

8.
Aadhar number

According to Section 139AA of the Income Tax Act 1961, a person is required to quote his Aadhaar number when filing the ITR. If you do not yet have your Aadhaar number but have applied for it, you will need to provide your registration ID in the ITR form.

9.
Details of investment in unlisted shares

If you held unlisted shares during the 2021-22 financial year, you will need to disclose this information in your ITR. In this case, note that you cannot file your tax return using ITR-1, you will need to use Form ITR-2.

You will need to provide the following details in ITR-2 regarding unlisted shares:

a) Company name

b) Type of company

c) Company PAN

d) Opening balance as of April 1, 2021 and acquisition cost

e) Unlisted shares acquired during the year with date of purchase, par value of shares, issue price per share (in case of new issue)/purchase price per share

f) Unlisted shares sold during the year and amount received

g) Closing balance as of March 31, 2022 and acquisition cost.

ten.
bank account details

It is mandatory to provide details of the bank account(s) you hold during the 2021-22 financial year. Even if you closed your account during the fiscal year, you will need to report it. You must mention the name of your bank, the account number, the type of account and the IFS code. In addition, the bank account must be pre-validated to obtain the income tax refund credit.