Ten handy tips to help file your tax return

To be honest, this is a column I repeat towards the end of every financial year. I feel the pointers laid out herein are so vital for the process of preparing tax returns that the annual repetition is justified.

Here’s a checklist to help you with your last-minute tax planning.
1. The most important thing to do is to compile a list of the tax deduction at source (TDS) payments made by you. TDS operates like tax already paid. In other words, from your final tax liability, you have to pay only such amount that is over and above the tax already deducted.

2. If you have availed of housing finance, be sure to collect a certificate of equated monthly instalments and interest paid from the housing finance company.

3. Remember, you can claim Sec 80D mediclaim deduction even in respect of premiums paid for your parents. If you buy medical insurance for yourself and for your parents who are 65 or above, the total deduction that can be claimed is Rs35,000.

4. Your yearly contribution to provident fund qualifies for tax deduction under Sec 80C. So do home loan instalments paid as also tuition fees for children. Don’t forget to include these if applicable in your tax return.

5. If you have made a donation, you will need the receipt issued by the donee institute to get the benefit of the deduction under Sec 80G. If you have not collected such a receipt, do so soon.

6. Business loss cannot be set off against salary income. Similarly, any capital loss cannot be set off against any other type of income. Short-term capital loss can be set off only against short-term capital gain or taxable long-term capital gain.

7. Since long-term capital gain from sale of shares and equity MFs is tax-free,
any long-term capital loss from the same cannot be set off at all.

8. Most losses (other than long-term capital loss mentioned above) can be carried forward for set-off for as long as eight years. However, for this, you need to file your tax return by the due date. For individuals, this date is generally by July 31 of the assessment year. If a return is not filed by this date, then carry forward of losses is not allowed.

9. Long-term capital gain earned on sale of residential property may be saved by investing the capital gain amount in another property. However, to save tax on long-term capital gain from sale of any asset other than residential property (say commercial property), the entire sale proceeds need to be invested in new property and not just the capital gain. If a lesser amount is invested, the deduction will be proportional.

10. If you are a female assessee under the age of 65, do not forget to take into account the special tax exemption slab of Rs1,90,000 while arriving at your tax. And if you are above the age of 65, remember to claim the special slab exemption of Rs2,40,000.

Last but not the least, get in order all your supporting documents of the tax planning/saving instruments that you have invested in.

Though the new tax return forms (ITR series) do not require the submission of any documents, the tax officials can always call for the proof if required.

— The writer is director, Wonderland Consultants, a tax and financial planning firm. He may be reached at sandeep.shanbhag@gmail.com