We all enjoy the comfort of home and the flexibility of working from it. However, there is one thing that we universally dislike – Homework! We were annoyed with those teachers from our school days, who were giving Homework, particularly assigned over the weekend.
Here is an opportunity for all taxpayers to revisit their nostalgic feelings about homework. The previous financial year in India just ended on 31st March 2023. This is the time the taxpayers need to put together certain vital documents and information. Remember, the tax department (like the Teacher) is strict and expects 100% compliance, so accuracy is crucial.
Home Work – 1: Bank Statement between 1st April 2022 and 31st March 2023. Please login to all the bank accounts (I mean all), and download the statement for this period both in PDF and Excel formats. Use Excel to note transaction details, which will help recall events later.
Home Work – 2; If there are major transactions that happened in the said period, it is better to get the attestation on the bank statement by the Bank Manager/Relationship Manager with their seal and signature. Do you know that the tax department can ask for information for up to 11 years, if there are transactions over Rs.50 Lakhs, which escaped tax, according to them! For example, for the previous year, the department can ask for the information on or before March 2034.
Home Work – 3: Profit and Loss Statement from Demat Accounts. Download the Profit and Loss Account, Tax Profit and Loss Account, and Transaction Statement from the Demat Account in PDF and Excel formats. This will be handy for tax filing purposes.
Home Work – 4: Obtain the Home Loan Interest Certificate from the bank. If possible, get the signature of the relationship manager, if the interest outgo is huge.
Home Work – 5: Credit Card Statement – If you have spent over Rs.2 Lakhs on Credit Card and it has significant high-value transactions, download and save them.
Home Work 6: Property Purchases and Sales – All documents pertaining to purchases or sales are to be sorted out and preserved for future reference.
Home Work 7: Repatriation of Funds – If an NRI/OCI has transferred funds to India in the previous years, please download the Bank Statements of foreign accounts and save them with the India records. In my experience, the Indian Tax authorities are asking for proof of payment from abroad.
Home Work 8: Foreign Tax Returns – In case you filed foreign tax returns, save them for Indian tax purposes. You don’t know who and when and for what they will ask these things. But there are instances of such documents being asked often by the tax authorities.
Home Work 9 – Sort and save all receipts, such as insurance premiums, house rent payments, and leave travel tickets. Preferably, keep a soft copy in cloud storage for easy access.
I am sure with these examples; you would have got a fair idea of what the tax authorities may look for. Considering this, you can customize your cheat sheet and start accumulating the information and documents for the previous year.
As I said in the beginning, none of us like Homework and therefore procrastination is expected. But consider this exercise as a necessary evil and finish the task as soon as you can.
Have a great new financial year 2023-24. Earn more and pay more (taxes)!