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7 things to do NOW to avoid problems in filling and filing your Income Tax Return (ITR) form

Here is a list of things you should do right now in order to avoid any issues while filing your Income Tax Return (ITR).

Let’s face it: The entire process of filing your income tax return (ITR) is quite exhaustive. Most of us wake up only when the deadline for filing the ITRs is near, and then rush for documents.

(What if you can’t file your ITR in time? Check out “Missed the income tax return (ITR) filing deadline of 31st July?”)

Is there something you can do right now, so that your tax return can be filed smoothly? Yes! Here is a list of 7 critical things you should do to make the income tax return filing process smooth.

 

1. Collect Form 16

All of us who are salaried employees receive the Form 16 every year – it is a statement of your income and the tax deducted at source (TDS) on in by your employer. This is one of the most vital documents needed to fill an ITR form.

Form 16 is usually handed out to you in May or June – so collect it from your employer and keep it safe!

If you have worked for more than 1 employers during the financial year, collect a From 16 from each of them.

(Want to better understand terms like Financial Year and Assessment Year? Read “Income Tax (IT) Jargon – Financial Year (FY), Assessment Year (AY)”)

 

2. Collect Form 16A

Like Form 16, Form 16A is also a statement of income and tax deducted at source (TDS) – but by entities that are not your employers.

You would typically get this from banks and financial institutions that pay interest to you and deduct TDS from it. You should get one Form 16A from each bank that has deducted TDS on your income.

 

3. Collect your bank statements

In your income tax return, you need to mention all your income – and not just your salary income. This includes interest earned on the money lying in your savings account, interest earned on your fixed deposits (FD), etc.

(To know more about FDs, read “Fixed Deposit (FD) – A favourite for generations” and “Fixed Deposits (FD) for saving income tax through section 80C”)

You also need to mention income on which there is no income tax – like dividends received from the companies whose shares you own.

Your bank statement would come handy to collect all this information.

 

4. Collect your rent receipts

If you pay rent for your accommodation and are going to claim House Rent Allowance (HRA), you need to have all your rent receipts. If you have missed collection any, this is the time to do it!

(To know more about saving income tax through HRA, please read “Income Tax (IT) treatment of House Rent Allowance (HRA)”)

 

5. Collect home loan calculations from your bank

If you have taken a home loan and are paying EMIs, you would definitely claim the income tax benefits.

(For more details, please read “Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage”)

In order to do this, you need a certificate from your bank / financial institution that mentions the amount of interest they have collected from you, and the principal repayment you have done during the financial year.

Again, this certificate is normally issued in May / June – so please collect it and keep it safe.

 

6. Collect information about any sale of real estate

If you have sold any real estate – house or land – this information would be vital for your income tax return (ITR).

Do all the calculations about capital gains, etc in advance so that you just have to fill in the details in the ITR.

(Please read “Long Term Capital Gains (LTCG) on Sale of a House – Calculation and Income Tax” to know more about capital gains on sale of a house)

 

7. Collect information about your stock market activity (Stocks and Mutual Funds)

You also need to pay capital gains tax on any profits made from stock market – irrespective of whether it is through direct investment in stocks or through a mutual fund (MF).

(Should you invest directly in shares, or do it using MFs? Read “Direct investment in Stocks versus Mutual Funds” for an in-depth analysis)

It is best to collect all your buy and sell data in advance and do all the capital gains calculations. For more information on this, please visit “Long Term and Short Term Capital Gain – Income Tax Calculation”.

 

Conclusion

As we discussed, the process of filling and filing your income tax return (ITR) form is tedious. But if you follow these guidelines, you would be best prepared for the ITR filing time, and there would be no last-minute surprises!

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