After filing Income Tax Return (ITR), most people assume that their work is over. Many times people delete Form-16, bank statements, investment documents and other tax records or do not maintain them. But tax experts say that this negligence can prove costly in future. The Income Tax Department may ask for documents even after many years to investigate any transaction, tax exemption, capital gain or other claims. In such a situation, it is very important to keep correct records safe.
Is it enough to just have a digital copy?
Nowadays, most of the tax documents are available online. Form-16, Form 26AS, Annual Information Statement (AIS), bank statements and investment related documents can be easily downloaded in digital form. Experts say that for ordinary taxpayers, it is considered sufficient to keep clean and secure digital copies of these documents, provided they can be easily retrieved when needed.
However, original hard copies of some important documents should also be preserved. These include property purchase documents, gift deeds, loan agreements, inheritance documents and records that prove ownership of a property or its purchase cost. In such cases, it is considered better to keep the original document safe along with the digital copy.
Keep necessary records according to the source of income
According to experts, which documents to keep safe depends on the source from which your income comes. If you are employed and file ITR-1, then keep Form-16, salary slip, bank statement, interest certificate, proof of investment and documents related to tax exemption safely.
If you have earned capital gains from selling shares, mutual funds or property and have filed ITR-2, then keep all records related to purchase and sale documents, demat statements, contract notes, broker statements, stamp duty and capital gain exemption safe. Whereas, taxpayers with business or professional income should maintain account books, invoices, expense bills, GST records, bank statements, loan documents and other financial records. Should.
Every taxpayer should have these documents
According to experts, there are some documents which almost every taxpayer should keep safe. These include ITR receipt (ITR-V), filed ITR, Form-16 or 16A, Form-26AS, AIS, tax payment challan receipt, bank statement, proof of investments like LIC, ELSS and health insurance, home loan interest certificate and property and business related documents as per requirement.
For how many years should tax records be kept?
Tax experts recommend that ITR and all related documents should be preserved for at least eight years after the end of the relevant assessment year. If a tax matter is under investigation, appeal or reassessment, preserve the records until the matter is completely concluded.
At the same time, it is wise to keep documents related to long-term investments like property, inherited assets or unlisted shares till the property is sold and even for many years thereafter.
Systematic records will save you from future problems
If necessary, the Income Tax Department may ask for documents during scrutiny, matching of information entered in AIS and Form-26AS, investigation of capital gains, verification of tax exemption or investigation of large financial transactions. In such a situation, if your records are organized then it will be easy to respond to the notice and unnecessary trouble can also be avoided.
This is the reason why tax experts, after filing ITR, recommend keeping all the important documents systematically digital and, where necessary, even in hard copy. This habit can play an important role in saving time, effort and legal problems in future.
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