The 2020 budget has brought in some good news for the senior citizens. This was done to address the falling interest rates, rising cost of living and increasing medical expenses. The government to offer some relief, has introduced provisions such as –
- allocating Rs. 9000 crores for the welfare of senior citizens
- hiking the bank deposit insurance coverage from Rs. 1 lakh to Rs. 5 lakhs
- providing income tax benefits under Sections 80C, 80D and 80DDB of the Income Tax Act
Managing and reviewing your financial records as the financial year ends is crucial for planning your finances well for the coming year. Here are a few factors you should keep in mind while doing the year-end financial planning.
1. Documents, Check
Keeping all paperwork organized, filed and up to date ensures a smooth sail while filing for returns. All accounts need records to back them up; hence, it is critical to have all these documents in place:
- Bank Statement: Bank statements recap your interest and other taxable earnings for the year. It is essential to review your bank statement regularly to ensure the validity of all transactions. You can get a copy of your bank statement either online or physically from your bank
- Securities Statement: Statements of all tax-saving investments like 80C and 80D (Shares, Bonds, Mutual Funds, Fixed Deposits, Life Insurance, Medical Insurance, PPF, etc.) need to be filed as proof to ensure that correct claim of investments is made
- Interest Certificate: Interest certificates can be obtained from the bank or the post office to know more about the actual interest income earned from savings or fixed deposit accounts
- Passbook: An updated passbook makes it easier to report details of income in the form of dividends or interest. Even if you fail to procure an interest certificate, updated passbooks give you income information during the financial year
- TDS Certificate: TDS is tax deducted by banks on the interest earned. Before FY 2019-20, banks had to deduct tax if the interest earned was more than Rs.10,000/-. Since last year, the limit has increased to Rs. 40,000/-. To save tax (if the amount is less than Rs. 40,000/-), a TDS certificate (i.e Form 16A) can be obtained from the bank, or you can submit form 15H to the bank
- Capital Gains Statement: If you have gained capital from the sale of a property, mutual funds or equity shares, the Income Tax Department needs to be notified. In case of a property, a copy of the purchase deed and sale deed needs to be submitted. For mutual funds, the brokers provide a capital gain statement on request
- Home Loan Interest: Loan statement provides break-up details of both, principal and the interest that an individual has repaid to the bank towards a home loan. The document acts as proof as well as a source of information while filing an ITR. Interest paid for home loans can also reduce the tax liability allowing a tax claim of up to Rs. 3.5 lakhs
2. Tax Calendar - Financial Deadlines
As a taxpayer, it is important that you be aware of the financial deadlines to avoid any penal consequences as well as save on taxes. The Income Tax Department has been informing people about tax dates for the year 2020 through social media. Here are a few to note down:
How to link PAN with Aadhar
It is mandatory to link your PAN with Aadhar before the 31st of March, 2020. You can do so by SMS or online on the Income Tax E-Filing website.
SMS: To link, send a message in the following format to the PAN service providers on 567678 or 56161.
For example, if your Aadhar number is 000123456789 and your PAN is AABDA9939Q, then the SMS to be sent will be:
UIDPAN 000123456789 AABDA9939Q
-If you are a registered user at the income tax e-filing website:
1. Log in to the website by entering PAN (User ID), password and your date of birth.
2. Click on the 'Profile Settings' tab and select the last option 'Link Aadhaar'.
3. The screen will reflect a message 'Your PAN is already linked to Aadhaar number (if your PAN is linked with Aadhar).
4. In case your PAN is not linked to Aadhaar, a form will appear where you will be required to enter details - name, date of birth and gender as per PAN records. Next, your Aadhaar number
5. Click on submit after entering the captcha code appearing on the screen
6. Once submitted, a success message will be displayed on your screen.
-If you are a non-registered user and do not wish to register, a hyperlink (Link Aadhar) is provided on the left of the homepage of the e-filing website and also on the income tax website.
- Enter the following details:
2. Aadhaar number; and
3. Name as precisely specified on the Aadhaar card (avoid spelling mistakes)
-After entering the details, enter the captcha and click on submit.
-Post verification from UIDAI the linking will be confirmed.
The process for filing Income Tax Returns requires filling two forms:
ITR 1: Total Income includes
- Salary or pension
- Income from house or property (excluding incidents where loss is brought forward from previous financial years)
- Income from the other sources (excluding income from horse racing or winning lottery)
ITR 2: Total Income Includes:
- Pension or salary
- Income from house or property
- Capital gains
- Income from other sources (includes winning from horse racing and lottery)
- Instances where the income of another individual (husband/wife) has to be combined with the income of the individual
- Filing tax returns online is simple. Visit the Income Tax Department’s website, download the forms, fill the relevant columns with the specific details, and submit it
- You can also file your ITR through any third-party e-filing website that also assists in calculating income tax amount and provides professional advice through the process
- In case you find it difficult to file the return yourself and need additional expert advice, it is best to consult a chartered accountant to help you with the process