Essential guide for first-time income tax filers | Fusion - WeRIndia

As the deadline to file Income Tax returns (ITR) approaches, first-time taxpayers need to understand the basics of the process. Filing your ITR by July 31 of a financial year is crucial to avoid penalties.

Here are key lessons every beginner should know before filing their ITR:

Your total taxable income includes all income sources, such as salary, after accounting for any tax-saving deductions.

India offers two tax regimes: the old and the new. The new regime, introduced in 2020, has revised tax slabs and concessional rates but limits certain deductions and exemptions.

The default will be the new tax regime, so if you want to choose the old regime, you can choose it. Evaluate the pros and cons of each regime to make an informed decision.

Before you start the filing process, collect all relevant financial documents.

These typically include:

• Form 16 from your employer
• Bank statements
• Investment proofs for tax-saving investments
• Rent receipts (if claiming HRA)
• Loan statements (for home loan interest deduction)
• PAN and Aadhaar card

Form 26AS provides a summary of your income with TDS (Tax Deducted at Source) deductions. It is essential for accurate tax filing.

The AIS contains details such as interest income, dividends, securities transactions, and foreign remittances, all pre-filled in your ITR form for convenience.

Selecting the appropriate ITR form is crucial for accurate tax filing. Make sure to choose the form that matches your income sources and tax situation.

Deductions under sections like 80C (up to ₹1.5 lakh), 80D (health insurance), 80TTA (bank interest), and 80G (donations) can reduce your tax liability. Ensure you claim all eligible deductions while filing your return.

Timely filing is crucial to avoid penalties and interest charges. The usual deadline for filing an ITR is July 31 for the previous financial year.

Check the official Income Tax Department website for any extensions or changes in deadlines.

E-filing of returns through its portal is convenient and reduces the chances of errors. Those who file their income tax returns for the first time, can create an account on the portal and follow the process to submit their return.

After submitting your ITR, verify it within 120 days. This can be done through various methods. Some include Aadhaar OTP, net banking, or sending a signed copy of ITR-V to the Centralised Processing Centre, Bengaluru.

By following these steps, first-time taxpayers can ensure a smooth and accurate ITR filing process.

Image Credit: Universalashic, CC BY-SA 3.0, via Wikimedia Commons

Image Reference: https://commons.wikimedia.org/wiki/File:Income_Tax_Deoartment.JPG