The Indian Income Tax Act 1961 consists of 23 chapters and 298 sections. It requires a lot of in-depth analysis and years of study to gain expertise on the same. This post will restrict itself to the meaning and importance of ITR filing, the documents required for ITR filing, and the importance of Form 16 and Form 26AS while filing a return. Let us proceed.
What is ITR Filing?
The government requires you to pay taxes if your income earned during a year exceeds a predefined limit. ITR filing is a means to inform the government that you have paid taxes on your income accordingly.
Why is ITR Filing Important?
ITR filing provides several benefits. The list is endless. Due to the paucity of time and space, we will restrict ourselves to the top 6 benefits that filing an ITR offers. Let’s look at them in brief below.
- ITR filing keeps you tax-compliant.
- Filing an ITR on time avoids unnecessary penalties.
- ITR receipts serve as proof of income and payment of taxes.
- Banks require ITRs to process hassle-free loans.
- Embassies require ITR receipts to process Visa applications.
- Filing timely ITRs helps businesses carry forward losses.
Documents Required for ITR Filing
The documents required to file an ITR depend on what kind of income tax assessee you are. If you are a salaried professional with no other income, all you need is your Form 16 and Form 26AS. As this post deals with the importance of Form 16 and Form 26AS, we will restrict ourselves to salaried employees only. Broadly, a salaried employee needs to keep the following documents handy while filing an ITR:
- Form 16 (including Form 16A, 16B, 16C, 16D)
- Interest certificates from PO or banks
- Form 26AS
- Investment proofs
- Proofs for claiming deductions u/s 80D-80U
- Home loan statement (if applicable)
- Capital gain records (if applicable)
- Pre-validated bank a/c information for IT refund
- Aadhar card
- Details of investment in unlisted shares (if applicable)
- Details of all bank accounts
- Salary slips
Importance of Form 16 and Form 26AS While Filing a Return
Form 16
We are sure you already know how your Form 16 looks like. Form 16 Part A contains your name, address, and PAN, as well as that of your employer. Additionally, it also mentions the deductor’s TAN and details of TDS.
- Form 16 is important because it provides you with easy access to the details needed for filing an ITR correctly. It helps consolidate all information related to filing an ITR, including your total income, applicable deductions, the relief sought under section 89, TDs details, the total tax liability, net tax liability, etc.
- Although you can file an ITR using your salary slips without needing a Form 16, the process is tedious, and the chances of making errors are higher.
- Another benefit of Form 16 in filing an ITR is the fact that it can only be provided by your employer and cannot be downloaded by anyone else from anywhere else.
Form 26AS
Form 26As is a yearly statement that highlights the details of the tax credit against your PAN. You can download it from TRACES using a login ID and password or your internet banking login. Alternatively, you can also download Form 26AS by logging in to the official IT e-filing website.
Form 26AS, just like Form 16, also contains two parts A and B. Part A includes the usual suspects, your name, PAN, Aadhar, DOB, mobile number, email ID, and address. Form 26AS is important because it’s Part B contains information related to TDS, advance, regular, or self-assessment taxes, income tax refund received, tax deducted on rent above Rs. 50,000 per month, mutual fund purchases above Rs. 2 lakhs, and other high-value general or property transactions. These details help you to file your ITR swiftly and without errors.
- Form 26AS allows you to match the TDS data contained in Form 16 with government records. In case of any discrepancy, you can contact the appropriate tax authorities and seek an amendment or correction.
Moreover, If you want any other guidance concerning ITR Filing, please feel free to talk to our business advisors at 8881-069-069.
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