How to file income tax returns for beginners in India: For all Indian taxpayers, filing income tax returns (ITR) is an essential financial duty. Knowing how to file your taxes is crucial, regardless of whether you are a small company owner, self-employed person, or salaried employee. First-timers may find the procedure intimidating, but with a methodical approach, it becomes doable. The purpose of this book is to assist novices in comprehending the why, when, and how of submitting an Indian tax return.
Why is it important to file income tax returns?
In addition to being required by law, filing an ITR offers several advantages that may affect your credibility and financial security. The following are the main justifications for filing your income tax returns:
Proof of Income: When applying for a loan, credit card, or visa, an ITR is a necessary document that acts as proof of income.
Request Tax Refunds: By submitting an ITR, you can request a refund for overpaid taxes or excessive TDS deductions.
Carry Forward Losses: You can carry forward capital or company losses for future tax adjustments by filing returns.
Avoid fines: Section 234F of the Income Tax Act imposes fines for late or non-filing.
Develop Financial Discipline: Better financial tracking and management are ensured by regular ITR filing.
In India, who is eligible to file an income tax return?
While filing an ITR is not required for everyone, some groups of people are required to do so depending on their income and other financial activity. An ITR should be filed if:
Your earnings above the basic exemption threshold:
- 2.50,000 naira for those under 60.
- ₹3,00,000 for older persons between the ages of 60 and 80.
- For extremely old individuals above 80, ₹5,00,000 is available.
You fulfil certain requirements:
- You have overseas assets or sources of income.
- During a fiscal year, you deposited over ₹1 crore into a current or savings account.
- Every year, you pay more than ₹1 lakh in electrical bills.
- You have travelled abroad and spent at least ₹2 lakh.
You’re Looking for Tax Refunds: To collect any tax refund resulting from excessive deductions, an ITR must be filed.
Important Records Needed to File an ITR
The ITR filing procedure may be considerably streamlined by having the required paperwork on hand. This is a list of necessary documents:
PAN Card: In order to file an ITR, a permanent account number is required.
Aadhaar Card: For smooth e-verification, make sure your PAN and Aadhaar are connected.
Form 16: This form, which details salary income and TDS deductions, is provided by your employer.
Form 26AS: The Income Tax website offers an annual consolidated tax statement.
Bank Statements: For information on tax-saving deductions and interest income.
Investment Proofs: Records attesting to investments that qualify for Section 80C, 80D, and other deductions.
Loan Certificates: Used to deduct interest from student loans or mortgage loans.
Rent receipts: Rent receipts are required in order to claim benefits from the House Rent Allowance (HRA).
A Comprehensive Guide to Income Tax Return Filing
Step 1: Identify Your Sources of Income
List all of the sources of your income. Income is divided into five categories under the Indian Income Tax Act:
- Salary income includes wages, pensions, and benefits.
- Rental revenue or considered rent is the source of income from a home.
- Profits or profits from a business or professional practice are referred to as income from business or profession.
- Profits from the sale of assets, such as real estate or stock, are known as income from capital gains.
- Other sources of income include dividends, fixed deposits, and interest on savings accounts.
Step 2: Select the Appropriate ITR Form
For a smooth filing process, choosing the right ITR form is essential. An outline of frequently used forms is provided below:
ITR-1 (Sahaj): For salaried people who earn up to ₹50 lakh overall and from a single residence.
ITR-2: For people who have numerous home properties or capital gains income.
ITR-3: For people and HUFs who earn money from their businesses or professions.
ITR-4 (Sugam): For individuals choosing to use Sections 44AD, 44ADA, or 44AE’s presumptive taxation structure.
Step 3: Sign up for the Income Tax Portal or log in
Visit www.incometax.gov.in, the official website.
If you are a current user, click “Login,” and if this is your first time filing, click “Register.”
To finish the registration process, provide information such as your PAN, Aadhaar number, email address, and phone number.
Step 4: Get and Examine Form 26AS
An annual statement that lists all of the taxes that were withheld from your income and submitted to the government is called Form 26AS. Verify that there are no differences between this and your papers.
Step 5: Complete the Form for Your ITR
- Navigate to “Income Tax Returns” > “File Income Tax Return” under “e-File.”
- Choose the appropriate filing method (online or offline) and assessment year.
- Calculate your tax due, enter your income information, and claim deductions.
Step 6: Confirm Tax Obligation and Pay
Use the “e-Pay Tax” tool to settle any outstanding taxes if your total tax burden exceeds the amount you have previously paid.
Step 7: Send in Your ITR and Check It
Once the form is completed, check the data and send in your return. For quicker processing, use e-verification techniques like electronic verification codes (EVCs), online banking, or Aadhaar OTP.
Typical Errors to Avoid When Submitting an ITR
- Choosing the Wrong Form: Rejection may result from choosing the wrong ITR form.
- Not Reporting All Income: Bank interest and other minor earnings must be disclosed.
- Ignoring Tax Deductible Investments: A larger tax obligation may result from failing to claim qualified deductions.
- Inaccurate Information: Verify that every detail corresponds to the documents you sent in.
- Skipping Verification: Your ITR submission will be deemed invalid if you do not validate it.
Beginners' Guide to Tax-Saving Techniques
Invest in Tax-Saving Options: Make use of Section 80C by funding Equity Linked Savings Plans (ELSS), Employee Provident Funds (EPF), or Public Provident Funds (PPF).
Health Insurance: Submit claims for paid premiums under Section 80D.
Home loan benefits include the ability to deduct principle payments under Section 80C and interest payments under Section 24(b).
Section 80G deductions for charitable contributions are known as donations.
Interest payments on student loans can be written off under Section 80E.
ITR Filing Deadlines
- Individuals: the last day of the assessment year, July 31.
- September 30 of the assessment year (which necessitates an audit) for businesses.
- File the amended returns before the end of the assessment year, on December 31.
Resources and Tools for ITR Submission
- www.incometax.gov.in is the official tax portal.
- For easier tax filing, use mobile apps like ClearTax, TaxBuddy, or H&R Block.
- For complicated files, get advice from experts such as chartered accountants.
FAQs Regarding Income Tax Returns
What Happens If I Miss the Due Date?
Depending on your income, there may be a ₹1,000 or ₹5,000 penalty for filing a late return.
Am I Able to Submit Without Form 16?
Yes, you can use Form 26AS and paystubs to manually compute salary income.
What Takes Place If I Don’t Submit?
Penalties, interest on overdue taxes, and legal repercussions result from failure to file.
Can My ITR Be Revised?
Yes, you have until December 31 of the assessment year to file amended returns.
Is Electronic Filing Required?
Yes, e-filing is required for anybody making more over ₹5 lakh a year.
Conclusion
First-time income tax return filing may seem difficult, but with the right help, it’s actually rather simple. You may successfully submit your ITR and adhere to Indian tax rules by knowing the fundamentals, maintaining organisation, and utilising digital technologies. Take control of your financial destiny now by making sure that every paperwork is filed accurately and on time.
Take advantage of the advantages of being a conscientious taxpayer by getting started right away!