Important Steps To take For Tax Preparations In India

Filing income tax every year is an important step for Indian citizens who are earning an income. Whether you’re a salaried employee, a self-employed professional, a business owner, or simply someone who’s earning an income via property rental or investments, you’re required to file Income Tax returns by law.Filing your income tax return can sometimes be confusing and you may find yourself buried in numbers and calculations. Hence, it is always a good idea to do the necessary tax preparation in advance in order to file your taxes efficiently and correctly. Even if you do your own taxes, the following tips may help you do it in a more organized manner.

If you do not want to file your taxes on your own, you can take the services of a tax preparer or a chartered accountant. They’re usually well versed with income tax related knowledge and can file taxes on your behalf. They will ask for your financial history and calculate your taxable income and tax liability . Ensure you choose an experienced chartered accountant so that they can help you save on taxes wherever applicable. Also enquire about their charges in advance.

Once you choose your tax accountant based on your friends’ and family’s recommendation, make an appointment with them. It might be better to schedule an online appointment if you want to minimize contact due to the pandemic. Make sure you initiate contact with them as soon as possible in order for them to complete the filing process before the deadline.

You will need to submit the proper documents to file your income tax . Your chartered accountant will ask you for some or most of the following documents for filing your income tax:

For Salaried Individuals

• Aadhar Card
• PAN Card
• Form-16
• Monthly salary slips

Documents Related to Interest Income

• Bank Statement for last financial year
• Interest income statement
• TDS Statement

Form 26AS is a consolidation of all the taxes paid by you in a given year. It is provided by the income tax department and contains details of tax payments like advance tax, TDS etc. You can get your Form 26AS from the Income Tax website.

Section 80C of the Income Tax Act allows tax deductions for certain investments like ELSS Mutual Funds, ULIPs , Life Insurance , PPF, NSC. Premiums paid towards these investments can be deducted from your taxable income for an amount up to Rs. 1.5 lakh in a year.

Make sure you gather up all the receipts that are applicable for tax deductions. Receipts for premium paid on life insurance, tax saving mutual funds, children’s tuition fees, etc would allow your account to deduct from your taxable income and decrease your tax outgo. Look for following receipts wherever applicable:

• PPF Contribution
• Children’s Tuition Fees
• Life Insurance Premium Payment
• Stamp Duty and Registration Charges
• Home Loan Repayment (Only Principal)
• Equity Linked Savings Scheme

If you really want to make the tax filing process hassle-free, maintain a ledger with all details of major expenses, purchase or sales so that you can easily access the information if your accountant asks for it. Dates of property sales and purchase, addresses of properties and all such details can come in handy.

If you paid any advance tax or TDS (Tax Deducted at Source), but your eventual tax liability is lesser than what you already paid, then you will get the surplus amount as a tax refund. Your chartered accountant will tell you how much tax refund you stand to receive when they’re filing your return. The refund is usually credited into your bank account within 10-15 days of filing the Income Tax Return. You can also check the status of your tax refund by visiting the income tax portal online.

If you’re using the same chartered accountant for tax filing, they may already have most of your information from the previous year. However, a new accountant may find last year’s IT returns handy since they can use that information for filing the current year’s returns.

Income tax filing season is around the corner and the deadline for Assessment Year 2021-2022 is 31st December, 2021. You may attract a penalty if you miss the deadline for filing IT returns and may end up paying more taxes. Hence, make the necessary preparations as stated in this article and contact your Chartered Accountant as soon as possible. Even if your income is below the tax paying threshold of Rs 2.5 Lakh per annum, you’re still required to file your IT Return and claim zero tax liability.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.