Getting ready for the tax season
The tax season is around the corner. Month of July brings the due date for filing tax returns for the salaried and also for those who don’t need to get their accounts audited. This means, filing the income tax return is mandatory for all. While the income tax forms have been standardized, filling them is easy only if you have done your homework well. This is the why individuals need to start collecting the required information that will help them or their chartered accountants in correctly filing the returns.
A person might have earned income from several sources. This could include salary plus some capital gains and some amounts from some work done during spare time.
All the different income has to be shown in the return, hence collect information about the nature of the income, the amount earned plus tax deducted at source if any.
All this will help classify various receipts and then understanding whether this amount is taxable or not.
Tax deducted at source
The new income tax returns do not need any attachments but there is the need to mention all the required information in the return. This means that the supporting documents will have to be present. For this, the individual will have to collect various tax deduction at source certificates.
Often, this is a time consuming process because the certificates have to be obtained from all entities that have deducted tax.
One important information is the details about the interest earned by the individual on their savings bank accounts.
Many people, especially the salaried class, just fill in details about their salary and then do not add anything else to the figures.
This is actually submission of incorrect information because every rupee of interest earned by the individual is taxable so even if the amount is a few hundred rupees then this has to be disclosed and then taxed. It is unlikely that anyone will have zero interest in the savings account so this information is vital
Accumulation of details
There are several investments that accumulate earnings and may not show as the transaction done during the year concerned.
These have to be included for the purpose of taxation and due to this reason the details about such items have to be found out.
Some examples include a cumulative fixed deposit for which an interest statement can be obtained from the bank, a National Savings Certificate where the year of purchase will enable one to calculate the notional income for the year and so on.