It’s the time of the year when salaried individuals receive their Form-16 from their employers, and start filing their income tax returns (ITRs). Although the process to e-file ITR has become quick, easy, and can be completed from the comfort of an individual’s home. However, the entire process of filing an ITR can be daunting, especially for first-time filers.
Here are ten things that first-time taxpayers should keep in mind while filing their ITR.
Know your total taxable income
Your taxable income is your gross income (earned from your salary and other sources) minus your tax-saving deductions.
Which tax regime to opt for
Perhaps the most important question for new taxpayers will be to figure out whether they want to opt for the new tax regime or the old regime. While the new tax regime offers lower tax rates, the old regime has certain deductions and tax benefits that allow a taxpayer to save tax. “A choice has to be made and one way to do this is to choose one of the online tax calculators to find out in which regime the taxpayer will face a lesser tax outgo. Salaried taxpayers can choose a more beneficial tax regime when filing their tax regime, so they are allowed to switch,” said Archit Gupta, Founder and CEO, Clear.
However, this is not possible for those who have income from a business. If the taxpayer ends up choosing the new tax regime (default regime in case you fail to intimate your employer), he must still consider certain investments like EPF, PPF, and life insurance as a means of making investments, Gupta added.
Collect your Form 16
Form 16 is a TDS certificate provided by an employer for salaried individuals. This form includes all the salary details to be entered while filing income tax returns. It consists of information on the deductions you have claimed, the salary earned, and the exemptions availed.
Form 26AS
This is also a very crucial document that must be relied on for filing tax returns. It captures details of all the income earned on which there has been a TDS.
Gupta advises cross-checking the details mentioned in Form 16/Form 16A with details appearing in Form 26AS as regards the income and TDS entries. You can view as well as download your Form 26AS online. The details in this form get updated with every TDS return statement, the deductor uploads with the tax department.
AIS
The Annual Information Statement (AIS) includes new information – interest, dividend, securities transactions, mutual fund transactions, foreign remittance information, etc.
“When a taxpayer uses a ‘prefill’ option, information from the AIS is filled in the income tax return form,” said Gupta.
Which ITR form to file
ITR-1: For resident individuals having income from salaries, one house property, other sources (Interest, etc.) and having total income up to ₹50 lakh.
ITR-2: For individuals and HUFs not carrying out business or profession under any proprietorship.
ITR-3: For individuals and HUFs having income from a proprietary business or profession.
ITR-4: For presumptive income from Business or Profession.
Documents Required
Bank account details
Aadhaar details
Form 16 for salaried individuals
Investment proofs
Home loan interest certificate
Insurance premium payment receipts
Not filing returns can lead to penalty
Archit Gupta said not filing income tax returns can lead to a penalty of up to ₹5,000 even if the taxes were paid. Also, it is important to show tax returns as proof if an individual is seeking a loan, planning to buy a property, going abroad, or purchasing a huge insurance cover.
ITR deadline
The last day for filing your income tax returns is 31st July of every financial year.
Verification of ITR
After filing your ITR, the final step is to verify your returns. You can verify your return either online or offline. For the online option, you can access the information through the Aadhaar OTP. Through the online electronic mode, the IT department will send an e-verification mail to you to confirm the verification. For the offline method, you have to send the signed printout of the ITR to CPC, Bengaluru. The income tax department has reduced the time limit for e-verification or hard copy submission of the ITR-V, post-filing of returns by taxpayers to 30 days, beginning 1 August 2022.
Download The Mint News App to get Daily Market Updates.
Updated: 21 Jun 2023, 02:23 PM IST