The objective of any government across the world is the development, welfare, and security of its people. Education, health, and poverty elimination are the principal focus areas that require careful planning and considerable amounts of money to fund the necessary activities associated with them. Taxes are a method of meeting revenue plans – and for the Indian government, the income tax is a significant source of funds.
Policies of the government guide the tax management regime, and periodic reviews make the system more transparent and compliance easier. With the rapid growth of technology, digitisation is happening in all spheres of life, and so, income tax needs to be e-filed today on a specified portal.
Filing an ITR return is a simple process, with only some preliminary information good enough for submitting your return. But it is important to understand the various documents required for ITR filing. While most taxpayers are familiar with the requirements, a recap may help clarify and contribute to efficient tax planning.
When you plan to reduce your taxable income by taking benefit of the permissible deductions and exemptions, several documents/information are needed. However, before we find out the details, we need to understand that applying the rules and by-laws (of the Income Tax Act), denoting the exemptions, requires consideration in totality concerning your declared income. Therefore, the best tax planning exercise for you requires professional handling. This article takes a general look at the background documents/information necessary for filing income tax returns.
Documents Required for ITR filing of an Individual
A. Identity-Related Documents
- PAN card
- Aadhaar card
- Bank account details (number, IFSC code) of all your accounts, including non-operative ones
B. Income-Related Information/Documents
- Form-16/16A issued by your employer (certificate of tax deducted at source by your employer)
- Salary arrears, if any (tax liability will increase)
- Full & final settlement details (in case of a job change within a financial year)
- Withdrawal of PF (if any)
- Gratuity/leave encashment
- Joining bonus/relocation bonus
- Foreign earning, if any (claiming a foreign tax credit, i.e. FTC, will require submission of Form 67)
- Pension certificate (pension is considered as salary)
- Information on your taxable allowances (details of total amounts received and the amount claimed for exemption) such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA).
- Information on interest income (bank statement or passbook for savings account interest; interest details of fixed deposits, if any)
- Details of property: property information purchased, sold during the financial year, and rental income if any.
C. Investments and Deductions
The income tax provisions allow exemptions up to a maximum specified limit for investments and expenditures under sections 80C, along with sub-sections 80CCC and 80CCD (1) of the Income Tax Act.
- For the tax-saving investments, proof of payment is the principal document.
Some standard tax-saving instruments include:
Employees Provident Fund (EPF), life insurance premium, health insurance premium, Public Provident Fund (PPF), ELSS schemes of mutual funds, National Pension Scheme (NPS), post office fixed deposit, purchase of retirement plans, children tuition fees, etc.
The tax rules also provide for several other deductions on repayment of home loans, house rent payment, savings account interest, donations, and the cost of medical treatment.
The provisions of sections 80D and 80U, along with sub-sections, deal with medical expenses incurred for self or dependant for treatment of specified diseases, including physical handicap for self and dependant.
- In the case of a home loan, the loan statement from the bank is the document that allows you to claim deductions on the interest paid and on the principal amount
- Rent receipts and rental agreement for claiming house rent exemptions
- Bank statement showing interest credited to your savings account/s received during a financial year; you can avail deductions on savings interest received under section 80TTA
- Donation receipts from permitted institutions mentioning your PAN
- Certificates from government hospitals/doctors as specified in the provisions of the act, certificates from government hospitals/doctors are the required documents for availing deductions under medical treatment head
D. Details of TDS and Advance Payments Documents
- Advance tax-paid challans.
- TDS certificate issued by bank and others
- Form 26AS (This gives details of all tax deductions at source against a PAN and also the subsequent deposits made)
The deductions on interest received as per the provision of section 80TTA of the IT Act are applicable on savings account interest only.
Documents required for business return
The filing of returns depends on the structure of a company.
1) In the case of a sole proprietorship firm, your business income and other personal income will be clubbed and stated on the same return.
2) For registered companies and Limited Liability Partnership (LLP):
i) Identity-related documents
ii) The balance sheet of the firm; proof of audit by a registered chartered accountant, if the business turnover is above the applicable limit
iii) Supporting for business expenses claimed
Documents required in case of claiming capital gains
i) Purchase and sale deed: Including stamp valuation details, receipts for the cost of improvement
ii) Proof of transfer expenses incurred: Cost of transfer of any capital asset which is tax-deductible, plus expenses on brokerage and commissions
iii) Purchase deed in case of reinvestment: Exemption on capital gains can be claimed in case the proceeds are invested in buying another house property or invested in notified bonds
A summary of the applicable documents required for ITR filing:
Your income from all sources and other finance-related information form the basis of your annual tax return. The actual number of documents required for ITR filing will depend on how many permissible schemes you avail for lowering your tax burden.
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Q. How are the documents to be submitted in e-filing?
Ans. E-filing has now become mandatory. However, the income tax department does not require any document to be attached to your ITR.
The primary purpose of records is to facilitate your return filing process. Without the concerned papers, availing of the exemptions and permissible deductions is impossible. More importantly, the department will ask for relevant support in case of scrutiny or physical verification of your return.
Q. I have just started a small business, and the turnover is less than the minimum tax slab. Do I need to file a return?
Ans. In a particular financial year, it is advisable to file a return for any business, even outside the tax purview. For example, an income tax return can help your business secure a bank loan and other financial help; your IT return will make the process more manageable if you are in a business requiring participation in tenders.
Q. What documents are needed when filing the first income tax return?
Ans. You require identity-related documents, proof of income (Form 16 for those who’re employed), bank statements for interest details, Form 26AS for TDS details (if any), and evidence of specified savings investments. In many cases, the first ITR is outside the minimum taxable slab, thus reducing the need for several documents.