In Hindu mythology, there is a deity named Chitragupta, who is tasked with maintaining records of human actions. Upon arrival at Yamaloka after death, Chitragupta reviews these deeds. If good deeds outweigh the bad, the door to Swarga (heaven) is opened; otherwise, one may end up in hell. As human beings, we are bound to make mistakes, but it is essential to keep them in check so that good deeds outnumber bad ones.
In the modern world, we have our own “Chitragupta” in the form of tax authorities. While they don’t maintain our records, they expect us to maintain documentation of all our transactions for the past 10 years. Looking back at our grandparents’ time, we may have wondered why they kept seemingly trivial papers such as bus tickets, letters, and envelopes. However, while in CA practice, I realize the importance of documentation and record-keeping.
Is documentation really necessary and useful? Well, 90% of the time, it may not be required. However, when the taxman comes knocking, having proper documentation becomes crucial. A recent incident involved an individual who had to forgo a tax benefit of Rs. 9 Lakhs due to the lack of documents. It becomes a decision between maintaining documentation or potentially losing a significant amount of money. The choice is yours!
Let’s go through some of the documents you should consider preserving:
Loans and Borrowings: Documents such as Loan Sanction Letters, Loan Statements, bank account records reflecting repayments, interest certificates (downloadable annually), loan closure letters, etc.
Property Documents: Allotment Letter, correspondence with the builder/seller, payment receipts, Statement of Account (with builder’s seal and signature), Completion Certificate, No due Certificate, Possession Certificate, TDS Certificate (Form 16B), Registered Sale Deed, stamp duty and registration charge receipts, invoices from interior designers/contractors, broker receipts, proof of payment from bank statements, etc.
Investment or Tax Exemption Proofs: Tuition fee receipts, Air tickets (Leave Travel), Tax Residency Certificate (where applicable), donation receipts, bond copies, foreign investment proofs, etc.
Personal Details: Passport (including previous passports), insurance policies, cashless claim cards, all credit cards (including expired ones), credit card statements (highlighting important transactions), Aadhar card, PAN card, Voter ID, driving license (including old/expired ones), bank statements/updated passbooks, etc.
You can also maintain digital copies of these documents by scanning them and storing them in cloud storage.
With decades of practical experience, I have observed how people find themselves helpless due to a lack of document maintenance. To avoid being in such a situation, it is advisable to collate and save your records, so you don’t have to scramble when the time comes.