Filing tax returns? Keep your papers in order

The due date for filing tax returns for individuals (July 31) is round the corner. While preparing your returns, back-up documentation is necessary as it supports subsequent tax assessment. With e- filing of tax returns becoming mandatory, no document needs to be filed with the authorities while filing a tax return; however it is important that a salaried tax payer maintains adequate documents in support of his tax return as explained below:

FORM 16
This is the annual certificate issued by the employer stating the salary paid to an employee and details of taxes deducted thereon. These amounts would in turn be reflected in the tax return for income under the head 'Salaries' and the corresponding taxes deducted on the same.

The exemptions/deductions for various components of the salary like house rent paid, medical reimbursements, leave travel concession, car maintenance and driver's salary etc. are provided by the employer based on the actual proofs submitted by the individual.

There are also various deductions which can be allowed by the employer in the Form 16 based on the proofs submitted by the employee. Some of them are deduction for tuition fee, insurance premium, medical insurance premium, donations made to charitable organisations etc.

Apart from the Form 16, it is quite possible that the income tax officer may also request that these documents be submitted to the employer for the purpose of granting exemptions/deductions at the stage of tax assessment and hence it is necessary for the employee to keep a copy of such documents submitted to the employer.

A change of employment during a tax assessment year necessitates additional documentation. Income from both the employers would need to be consolidated. The concerned individual should submit a copy of Form 16/tax computation of the previous employer with the present employer at the time of joining so as to ensure that correct taxes are deducted by the present employer.

This helps to avoid paying additional taxes and interest which may arise on consolidating both the salary incomes, as both employers may have considered the slab benefit and made deductions in the respective Form 16s.

PERMANENT ACCOUNT NUMBER (PAN) CARD
One of the basic documents to be obtained by any tax payer is the PAN (Permanent Account Number) card. A copy of the PAN card should be submitted to the employer since the same is required to be quoted in filings with the revenue authorities and in Form 16 and 12 BA. This ensures that tax credits are granted to the employee.

HOUSING LOAN
Have you availed a housing loan for a property you are occupying or have let out? Do not forget to collect the proof of housing loan repayment with the breakup of principal and interest separately from the bank. This must be provided to the employer well in time to enable the employer to grant suitable relief at the time of tax deduction.

FORM 26AS
The employees can have details of taxes deducted at source from all sources like salary, interest, capital gains etc. in the Form 26AS which can be downloaded from the Income tax department website.

In case any discrepancy is observed between the tax credit in the Form 16 and what is reflected in the Form 26AS, please raise it to the attention of the employer for rectification. Please note that tax officers would provide credit only for the taxes reflected in Form 26AS.

TAX RESIDENCY CERTIFICATE (TRC) AND OVERSEAS TAX RETURNS
Are you a tax resident of any other country and availing treaty benefits in your tax return? This may be applicable in case your employer has sent you on overseas trips or posting overseas. If a treaty relief is being claimed based on residency in an overseas jurisdiction, it is now mandatory to obtain the tax residency certificate from the overseas country.

In cases where a credit for foreign taxes paid is claimed, the copy of the overseas tax return filed needs to be produced by the individual before the tax officer during the assessment proceedings for grant of appropriate relief.

OTHER DOCUMENTS REQUIRED
It may be worthwhile to prepare a statement of affairs and cash flow statement on an annual basis. Statement of affairs is the list of assets (land, house, jewellery, cash on hand etc.,) and liabilities (loans) at the end of the tax year. The bank statements need to be analysed for each of the receipts and payments It is also advisable to pay attention to the value of assets and loans against such assets held like buildings, jewellery etc., to assess if wealth tax liability is attracted.

Although filing returns have become easier, some planning is the need of the hour. Safeguarding and maintaining the above documents would help a tax payer to avoid last minute stress at the time of preparing the tax return or while attending to the tax notices and obtaining details from third parties at a later date. Be prepared with all the documentations required to avoid hassles with the tax authorities.

(N Anandan is deputy manager, Deloitte Haskins and Sells; Saranya V is senior executive, Deloitte Haskins and Sells)