TDS certificates should be available now: 4 steps to prepare to file income tax return

You have time till December 31, 2020 to complete the income tax return (ITR) filing process for the financial year 2019-20. However, ITR filers can start preparing by collecting TDS certificates, if subject to any TDS, from deductors because the last date for the deductors to issue these certificates for FY2019-20 expired on August 15. Therefore, TDS certificates should now be available from all deductors.

In fact, tax payers can prepare to file their ITR by doing four things. These are: (i) collect tax deducted at source (TDS) certificates from various deductors, (ii) collect tax-saving investment proofs, (iii) collect information about incomes you have earned from sources other than salary, and (iv) pay taxes (if any) that are due.

Here is a look at each of these in detail.

• Collecting TDS certificates

The last date for issuing TDS certificates for FY2019-20 by deductors expired on August 15, 2020. By now, deductors (like your employer, bank, post office or any other person/financial institution) should have issued the required TDS certificate to you for tax deducted, if any, from your income. If TDS has been deducted from any income of yours and the TDS certificate has not been received by you, then you should contact the deductor for the same.

Different types of TDS certificates are issued by different entities.

• Your employer has to issue you Form 16, a TDS certificate containing details of the total tax deducted during the financial year 2019-20, the total amount of salary paid to you, tax-exempted allowances such as house rent allowance (HRA) etc. Further, if you have declared tax-saving investments to your employer to avoid excess tax deduction on your salary income, then such investments will be reflected in the part B of your Form 16.
• Similarly, if TDS has been deducted on the interest income paid/accrued to you on fixed deposits or recurring deposits with a bank, then the bank is required to issue you Form 16A.
• If you have rented out your house property where the monthly rental exceeds Rs 50,000, then your tenant would have deducted tax on the rent payable to you. If so, the tenant would have to issue you a TDS certificate in Form 16C.

Also read: How to file ITR? Here's the complete guide

• Collecting tax-saving investment proofs

Due to the novel coronavirus pandemic, the government had extended the tax-saving deadline from to July 31, 2020 (from the usual deadline of March 31). It is likely that the last-minute tax-saving investments made by you - after March 31, 2020, will not be reflected in your Form 16 which is likely to have been finalised by the end of FY2019.

Therefore, you should collect all the tax-saving investment documents, relevant for FY 2019-20, to be claimed while filing ITR. If you miss out on claiming any deduction and/or tax-exemption from the gross total income, then you will end up paying higher taxes. The tax saving deadline is the last date for making specified investments, expenditures on which a tax break can be claimed.

• Collecting information about other incomes

Apart from salary, an individual can earn income from various other sources. These sources could include incomes such as interest income on fixed deposit placed for taking a bank locker, interest received from sovereign gold bonds, taxable bonds, dividend income from mutual funds, shares etc.

Though the income received by you during the year could be tax-exempt or taxable depending on the nature of the income, remember while filing ITR you are required to report all the types of incomes.

• Paying taxes that are due

Before starting the process of ITR filing, you are required to pay the full income tax that is due. Usually, the last date to pay self-assessment tax is the same as the last date of ITR filing, i.e., December 31, 2020 for FY 2019-20. However, this year the government has not extended the last date for paying self-assessment tax for a certain category of taxpayers.

As per a Central Board of Direct Taxes (CBDT) notification issued on June 24, 2020, individuals with self-assessment tax liability exceeding Rs 1 lakh for FY 2019-20 should pay their taxes on or before July 31, 2020. If the taxes are paid after this date, penal interest will be levied at the rate of 1 per cent per month or part of the month under section 234A of the Income-tax Act, 1961.

If your self-assessment tax liability exceeds Rs 1 lakh and you still have not paid your tax dues, then you should pay it as soon as possible to avoid paying a hefty penal interest.