Filing your Income Tax Return (ITR) for the first time can appear to be a daunting task. This process, however, is not as complicated as it seems and is a vital aspect of managing your personal finance. This article is designed to guide you through the entire process of filing your income tax returns for the first time. It aims to demystify the process, emphasizing what you need to know and do, as well as common mistakes to avoid.
Filing your income tax return is a legal obligation for every person whose income exceeds the basic exemption limit. It informs the government about the income you have earned during a year, the tax that has already been paid and the refunds that needs to be claimed. Beyond this, a correctly filed ITR can be helpful when applying for loans, visas and for claiming tax refunds.
This article is intended for individuals who are first time filers of income tax returns. They could be salaried employees, self-employed individuals, freelancers or even students who have started earning.
Small businesses owners and startups can also benefit from this guide, as it is important to start the habit of tax compliance from the initial years of operations.
The 'Income Tax Return' (ITR) is a form where taxpayers declare their taxable income, deductions, and tax payments. This procedure of filing income tax returns is called ‘Income Tax Filing’. One should file his/her return with the Income Tax Department before the stipulated due date.
In order to file your Income tax return, you will need the following documents and information - PAN card, Aadhaar Card, Form 16 (if you are a salaried individual), details of your bank accounts, proof of investments, insurance and loans, if any.
To commence filing your Income Tax Return, first, visit the official website of Income Tax Department. Register or log in using your Permanent Account Number (PAN), which will be your User ID.
Once logged in, choose the correct Income Tax Return Form. Your choice of form will depend on the source and amount of your income.
Fill in the required details – general information, income details, tax details, taxes paid in advance or deducted at source. Verify the tax calculated by the Form.
Make the payment if any tax is due. Once all taxes have been paid, submit the form and e-verify it either through Aadhaar OTP, bank account number, or Demat account number.
The due date for most individuals is July 31 of the assessment year unless it’s extended. Late filing of ITR attracts interest under Section 234A and penalty under Section 234F of the Income Tax Act. Also, it’s mandatory to link your PAN card to your Aadhaar number before filing an income tax return.
Mistakes in your ITR can result in its rejection or a notice from the Income Tax Department. Common mistakes to avoid include - not disclosing all sources of income, claiming incorrect deductions, not reporting exempted income and wrong bank or contact details.
Q: Can I file ITR after the due date?
A: Yes, you can file a belated return before the end of the assessment year, but it may attract late filing fees.
Q: What are the advantages of filing ITR?
A: Filing ITR helps in tax refund, applying for loans, visa processing, and claiming insurance cover.
Q: Is it mandatory for salaried individuals to file an ITR?
A: Yes, if your annual income crosses the tax-exemption limit, you need to file an ITR.
The process of filing your ITR is an important aspect of financial planning and management. While it may seem complex at first, understanding the key concepts, necessary documents, and the step-by-step process can make it a lot simpler. Moreover, timely and correct filing can keep legal troubles at bay and have several other advantages.
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