Financial documents-what to keep and what to toss

Financial documents-what to keep and what to toss

Most of the time people are unable to decide which of the Financial Documents are important to be preserved and which ones are to be tossed. So some of them even spare a storeroom full of boxes stuffed with old bank statements, income tax returns, salary slips and form 16s. Since the financial year has ended, pretty soon you’ll be gearing up for the tax return filing for the same. So It’s about time you deciding which documents to keep, and which ones to toss.

This task gets more confusing if the time period for which the documents should be kept is not known. For example: How long to keep the bill of air conditioner you bought recently? Or How long to keep the LIC premium receipts?

So it is important to know which documents are to be retained and for how long. We can divide the type of documents into two part:

  1. The documents to be retained for a particular period
  2. The documents where only recent copies are needed
  1. Financial Documents to be retained for a particular period

There are some documents which have to be kept till the time they are relevant. After that, they may be shredded. It is not always necessary to store all the documents in paper form, scanning and retaining it electronically is sufficient. So go paperless and make use of some of the online drives and cloud storage to manage and store your documents properly. Some of the documents like birth certificate, PAN, marriage certificate etc are to be maintained in their original form. So make sure to preserve them properly.

Here is the list of the documents to be retained  for a particular period:

  • Tax returns and related records such as Form 16, Investment certificates, tax payment counterfoils and other income tax related papers, are to be maintained for 7 years.
  • Purchase bill of items under warranty and the warranty document till the validity of the warranty.
  • Insurance policy documents till the policy is in force.
  • Any fixed deposit and term deposit receipts till end of the fixed term.
  • In case of Investments in stocks, bonds, mutual funds, keep the documents until you sell.
  • Keep Loan documents until the loan is paid off.
  1. Financial Documents where only recent copies are needed

Leaving aside the above documents, there are certain documents of which it is necessary to keep only the last updated statements. So in the following cases, only the recent copies are to be kept on record:

  • Provident Fund balance certificate to know the latest balance of PF account.
  • Home loan interest certificate, any invoice etc. which may be necessary to establish an immediate claim.
  • Income tax exemption certificate are granted for the given year after which it can be disposed off.
  • Any intermediate or temporary receipt which can be subsequently replaced by a final one i.e; ATM receipts, credit card receipts, bills of general expenses etc.

Financial document storage is an important task and needs to be carried out every year. It is likely that some documents are irreplaceable, meaning that if lost can not be regenerated and for some others if lost it might cost substantial time, effort and money to get a duplicate issued. Since all this documents are of vital importance their safe keeping is necessary.


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