A guide to all you need while filing tax returns

For starters, choosing the right ITR form depending on your income from different sources is the first step to ensure an error-free tax filing (see graphic). For instance, if you are a salaried individual who has made capital gains on sale of equity shares, you cannot file the simple ITR-1 and will have to opt for ITR-2. But, if you have dabbled in the derivative markets, you need to choose the much more complicated ITR-3 or ITR-4 as income from futures and options (F&Os) is considered business income. Similarly, it is important that you reconcile all the auto-populated information in the ITR form with the individual income certificates to avoid getting a tax notice from the taxman. As you gear up to file your tax returns, Mint gives you a comprehensive guide on two important steps involved in the process.

Pre-validate bank account

This step is crucial if you are expecting a refund on excess tax paid to the I-T department. It is advised that you validate the bank account in which you want the tax refund to be credited before you start filing your tax return. The option to validate a bank account is available under the ‘my profile’ tab in your account on the e-filing portal.

The I-T department validates only those bank accounts for the refund that are linked to your PAN. Further, during the validation process, you must provide the same mobile number on the e-filing portal that is available with your bank. Any discrepancy in details can lead to the validation request getting rejected. To avoid this, cross-check the phone number available with your bank and if needed, change it with the bank before you start the validation process.

If the validation request is rejected, you will have to wait for at least 24 hours to put in a fresh validation request.

Gather important documents

Even though this year onwards the newly developed e-filing portal has pre-filled ITR forms, some incomes, such as capital gains, need to be manually filled and some tax deductions and exemptions may not appear in your Form 26AS. Further, the ITR forms have also been made exhaustive, so it is all the more important to get all the information right.

Before you sit to file your tax returns, these are some of the important documents you must gather and keep ready.

Form 16: This is an income certificate that contains details related to the total salary paid along with the amount of tax deducted on it by an employer. Form 16 is particularly useful to new earners who have income only from salary and opt for ITR-1. As much of the information in ITR-1 comes pre-populated, the taxpayer can refer to Form 16 provided by his/her employer to cross-check the information.

Form 16A, Form 16B and Form 16C are other TDS certificates that contain information on incomes other than salary. For instance, TDS on interest income on deposits by banks and post office is reflected in Form 16A, whereas TDS on rent receipts is shown in Form 16C etc.

Form 26AS: This document is a consolidated tax credit statement that contains all the information related to TDS deducted by your employer, banks and other institutions and advance and self-assessment taxes paid. From the previous assessment year, the I-T department expanded the scope of Form 26AS to include information on high-value transactions. Form 26AS is issued by the I-T department, so you should reconcile information in it with the individual TDS certificates issued by respective institutions to ensure error-free ITR filing.

Capital gains statements: Property purchase and sale deed are necessary if you have sold a real estate property and made capital gains. You don’t need to submit these documents; instead, they are used to calculate gains. Further, I-T laws mandate the buyer to provide PAN details of the seller of the property in his/her ITR, so make sure to get the information from the seller.

For capital gains made on sale of mutual fund units or stocks, mutual fund houses and stockbrokers, respectively, provide capital gains statements.

Tax saving investment proof: If you have senior citizen parents who are not covered under a medical insurance policy, you can claim deduction on their medical bills. Similarly, donations made to eligible institutions can also be deducted from total income for tax benefit. These deductions are typically not declared to the employer and hence may not appear in your Form 16.

Though you don’t need to submit supporting documents in the ITR while claiming such deductions, you should keep the bills and receipts handy while filing returns to calculate the total amount to be claimed.