If you earn a regular salary or have a source of income other than salary, you will need to pay taxes to the government on the total taxable income earned in the year. Although some people choose to file their taxes themselves, the majority of taxpayers consult a Charted Accountant as they often find the process of filing tax returns time consuming and complicated.
While most of the work is done by your accountant, there are still certain things you can do by organizing your tax information to ease the process and make it quick and simple. Even if you do not consult a CA, here are some steps you can take to be tax prepared.
- Choose a Charted Accountant: The first step is choosing a Charted Accountant who is both an expert and is legally registered to file tax returns for individuals. You can ask your family members or your friends to recommend you a good charted accountant who helps them in filing their taxes. Also, inquire about the fees before you choose a charted accountant. Try avoiding someone who takes a percentage of your tax refund as his/her fees.
- Meet your Charted Accountant in person: As soon as possible, meet your Charted Accountant in person. It should be at least some weeks before the end of the financial year. They shall advice if there is any further scope of lowering your taxes for the year. For example, your CA can recommend you to invest in a <health insurance Policy, which can allow you tax deductions under Section 80 of the Income Tax Act.
- Gather Information/receipts about your taxes: By the end of the year, you will need all receipts regarding your payments. For example, if your company has deducted TDS (Tax deductible at Source) or if you have made payments towards a Charitable Foundation or paid a premium for your Life Insurance Policy, you can gather all these receipts at one place and present them to your CA. This will help him to figure out if you are eligible for a tax deduction and you can get a tax refund for the payments you have made in the previous financial year.
- Be updated about the changes in Tax Laws: You don’t have to be a financial wizard to know applicable tax laws. While most of the work will be done by the CA, it won’t hurt to know about the tax laws so that you can roughly know how you can be affected by a new tax laws. Either consult a financial advisor or read freely available brief summaries on the internet.
- List down all big revenues and expenses: For easing the process of tax filing, you can make a list of all the big revenues and expenses made in the financial year. This includes selling of any house property or land, any increase in the salary from previous year, rent paid, any new life insurance policy you purchased or payment towards any government schemes like NPS, etc. Once listed, it would be easy for your CA to file your taxes and there won’t be any chance of skipping a potential refund generating payment you made during the financial year.
- Find a copy of your previous year return: Find the copy of your last years’ tax return and can analyze it to figure out a rough amount you pay every year as taxes. This can allow you to determine an amount you can file as Advance Tax with the government. This can reduce year long tension of filing Income Tax Return and whatever the excessive amount; you will get it as Income Tax Refund.
It is vital to start tax preparation early in the year for a successful tax return filing. The better you prepare for taxes, the quickly and more efficiently your CA can file Income Tax Return for you. It doesn’t matter if you are doing your tax return yourself or consulting a CA, preparing for taxes is always advisable.