10 Things to Prepare Before Filing the Tax Returns

byPriyanka JuyalLast Updated: March 14, 2024
10 Things to Prepare Before Filing the Tax Returns

Filing tax returns is an important responsibility for individuals and businesses in India and proper preparation before filing can help ensure compliance with tax laws, optimize deductions, and streamline the process.

In this blog post, we will discuss the key steps you should take to prepare effectively before filing your tax returns in India.

List to Prepare Before Filing Income Tax Returns

Gather Required Documents

Collect all the necessary documents and records to support your income, deductions, and tax calculations. Important documents include:

  • Form 16: Provided by your employer, it summarizes your salary, taxes deducted, and other allowances.
  • Form 26AS: This document reflects the tax credits you have received, including TDS (Tax Deducted at Source) details.
  • Bank Statements: Gather statements from all your bank accounts to track interest income, dividends, and other financial transactions.
  • Investment Documents: Compile statements and proofs of investments in fixed deposits, mutual funds, shares, bonds, and other financial instruments.
  • Property Documents: If you own property, gather details of rental income, home loan interest, and property taxes paid.
  • Deduction Proofs: Collect supporting documents for deductions under various sections of the Income Tax Act, such as medical bills, insurance premium receipts, tuition fee receipts, and donations.

Must read: 10 Easy Ways to Save Income Tax On Salary

Understand the Changes in Tax Laws

Stay updated on any changes in tax laws, rules, and regulations that may impact your filing. The Indian tax system is subject to amendments, and being aware of these changes can help you make accurate and compliant tax calculations.

Verify Form 26AS

Carefully review your Form 26AS, available on the Income Tax Department’s website or through your e-filing account. Verify that the TDS details, advance tax payments, and self-assessment tax payments mentioned in Form 26AS match your records. Any discrepancies should be resolved before filing your tax return.

What is Form 26AS?

Form 26AS is a consolidated tax credit statement that provides a summary of a taxpayer’s tax-related information. It includes details of tax credits, such as TDS, TCS, advance tax, and self-assessment tax payments. Form 26AS helps taxpayers verify their tax liabilities, refunds, and high-value financial transactions reported to the Income Tax Department. It can be accessed online and serves as a crucial document during the income tax return filing process.

Income Tax e-Filing – Complete Procedure for ITR

Optimize Deductions and Exemptions

Understand the deductions and exemptions available under the Income Tax Act and assess which ones you are eligible for. This includes deductions for investments in schemes such as Public Provident Fund (PPF), National Pension Scheme (NPS), medical insurance premiums, and contributions to the Employee Provident Fund (EPF).

Maintain Separate Accounts for Business Income

    If you have business income, maintain separate accounts for business-related expenses, invoices, receipts, and sales records. This will facilitate accurate reporting and ensure compliance with tax laws.

    Consult a Tax Professional

      Consider seeking guidance from a qualified tax professional or chartered accountant, especially if you have complex financial situations or need assistance with tax planning. They can help you navigate the intricacies of the tax system and ensure accurate filing.

      Verify Pre-filled Information

        If you choose to file your tax return online, the income tax portal may pre-fill certain details based on the information received from employers, banks, and other financial institutions. Verify the pre-filled information for accuracy and update any incorrect or missing details.

        Utilize Digital Tools

          Explore online tax filing platforms and tax return preparation software approved by the Income Tax Department. These tools can assist you in accurate calculations, form filling, and e-filing of your tax return.

          E-File Your Tax Return

            Consider e-filing your tax return as it offers convenience, faster processing, and a digital record of submission. Ensure you have a valid digital signature certificate (DSC) or Aadhaar-based OTP (One-Time Password) for e-verification.

            Types of ITR Forms and Which One You Need to File

            Keep Copies of Filed Returns

              Maintain copies of the filed tax returns, acknowledgement receipts, and supporting documents for future reference. These records are essential for future tax planning, loan applications, and potential tax assessments or audits.

              Conclusion

              Preparing before filing your tax returns in India is crucial to ensure accurate reporting, maximize deductions, and comply with tax laws. By organizing your documents, staying informed about tax law changes, and leveraging digital tools and professional guidance, you can streamline the filing process and meet your tax obligations effectively. Remember to keep your records updated, maintain accurate financial records, and file your tax return on time to avoid penalties or interest charges.

              FAQs

              What documents do I need to gather before filing my tax returns?

              Before filing your tax returns, gather documents such as Form 16, Form 26AS, bank statements, investment statements, property documents, and proofs for deductions.

              How can I stay updated on changes in tax laws?

              Stay informed about changes in tax laws by regularly reviewing updates from the Income Tax Department, following news sources, and consulting tax professionals.

              What is Form 26AS and why is it important?

              Form 26AS is a consolidated tax credit statement that provides a summary of your tax-related information, including TDS, TCS, tax payments, and refunds. It helps verify your tax liabilities and transactions reported to the Income Tax Department.

              How can I optimize deductions and exemptions for my tax returns?

              Understand the deductions and exemptions available under the Income Tax Act, such as investments in PPF, NPS, medical insurance premiums, and EPF contributions. Assess which ones you qualify for and maximize your deductions accordingly.

              Should I maintain separate accounts for my business income?

              Yes, maintaining separate accounts for business income and expenses is recommended. This ensures accurate reporting and compliance with tax laws.

              When should I consult a tax professional?

              Consider seeking guidance from a tax professional or chartered accountant if you have complex financial situations or require assistance with tax planning. They can provide personalized advice and ensure accurate filing.

              Are there any online tools available for tax return preparation?

              Yes, there are online tax filing platforms and approved tax return preparation software provided by the Income Tax Department. These tools assist in accurate calculations, form filling, and e-filing of tax returns.

              Why is it important to keep copies of filed tax returns?

              Keeping copies of filed tax returns, acknowledgement receipts, and supporting documents is essential for future reference, tax planning, loan applications, and potential tax assessments or audits.

              Related News

              Received Income Tax Notice? Here’s Why

              The Income Tax department has sent an advisory to some taxpayers over the mismatch between disclosures in the ITR filed by them and information as received from the reporting entity. The entities include banks, financial institutions, stock market players, mutual funds, and property registrars etc.
              News Post: December 27, 2023

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