Have your returns been called up for assessment by a tax officer? If yes, this could be due to a variety of reasons. It could be anything like recording a high-value transaction in property, huge capital losses or deductions or foreign tax credits claimed in tax returns, and so on, or it could be on account of certain broad-based selection filters under the Computer Aided Scrutiny Selection (CASS).
Whatever be the trigger, receiving a notice from the income-tax officer is a gentle cue to the taxpayer that the process of collation and furnishing the documents and details before the tax officers has begun. The best way to handle these assessment proceedings in a suave manner is to be prepared with all the documents substantiating the income declared and benefits claimed in the tax return.
Some of the common list of documents required which must be retained by a taxpayer are Form 16 issued by the employer, TDS certificates issued by banks and other entities in relation to taxes deducted on income other than salary, Form 26AS, bank account statements, proof of all deductions claimed in the tax return, lease deed for rental income & receipt for payment of municipal taxes, stock trading statements, demat account statements which provide the details of purchase and sale of the shares, units, etc.
A welcome move by the tax department in the recent past is showering of relief on the taxpayers in cases which were selected during the financial year 2014-15 under CASS process. This confines the questionnaire and inquires by the tax officers to the specific ground on which the particular tax return was selected and mitigates the fishing inquires and scouting on various other unrelated issues.
While a majority of the above-mentioned documents are already collated at the time of filing a tax return, it is important these are properly maintained and preserved, to be prepared for submission to the tax officials at a later date, as in most cases, tax return of a particular year is scrutinised only after a year or so.
Time is the sole witness for the awkward times when you are asked for what you don’t have or missed out and which you can never garner at that point of time in response to the inquires of the tax officers. Simply keep a record of documents for no less than eight years to meet the requirements of the tax officials.
By Ashlesh Varma
The writer is partner with Deloitte Haskins & Sells LLP. With inputs from Ratna K, senior manager, Deloitte Haskins & Sells LLP