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Wed May 03 2023
Filing income tax returns can be daunting, especially in India, where the tax system is complex and ever-evolving. Whether you are a salaried employee, a freelancer, or a business owner, filing income tax returns accurately and timely is crucial to avoid penalties and maintain a good tax record. However, with the numerous forms, deductions, exemptions, and deadlines, it is easy to confuse and make errors.
To make your first-time income tax return filing experience smoother and hassle-free, we have compiled a list of ten essential things to remember. These guidelines cover everything from calculating taxable income, choosing the correct form, claiming deductions, and verifying returns, to name a few.
So, without further ado, let's dive into the ten things you should remember while filing income tax returns in India.
The first step in filing your taxes correctly is choosing the correct ITR form that best fits your income pursuit. Here is a brief outline of the different form types to choose according to your annual income and the source of that income:
Another crucial step in filing income tax correctly involves -identifying the category of your income slab. The income slab applicable to you for an assessment year will further determine your tax liability. Now, whether the income tax slab rate will change or remain the same is decided every year in the budget session.
A new tax regime has been introduced for taxpayers in the budget of 2022-23, which is instead of upcoming prescribed deductions and exemptions. Taxpayers now have the option to choose the best tax regime suitable according to their income. Salaried taxpayers can also change the tax regime they want to opt for, despite giving their employer a declaration before filing their ITR.
It is essential to keep all your documents handy while you sit down to file your income tax. Here are some of the details that you must keep with you for efficient results:
When we talk about income tax filing and refer to the term "income" here, it doesn't necessarily refer to the organization where you are employed. Returns earned from investments, savings, rent, freelancing, etc., are a part of your income source, irrespective of whether these earnings are exempted from taxation. Therefore, you need to take into account your income source. Also, when filing the ITR, calculate the total of your income source as GTI (Gross Total Income).
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As a taxpayer, to avoid any discrepancies in disclosing your income or incorrect filing of taxes, cross-verify all the prepaid taxes imposed on your transactions, including the tax deducted at source (TDS). By downloading Form 26AS, you can avoid errors in self-assessment or advance taxes.
In case of employment change within the financial year, the taxpayer must furnish the requisite salary and income details earned from the previous job. Once you have provided these details to your current employer, the current employer can issue a consolidated Form 12BA and Form 16, which will further be used in filing ITR.
Suppose you fail to comply with the respective details. In that case, it may result in falling short of TDS owing to duplication of deductions, exemptions, slab benefits, and other such facilities offered by your employer. In this scenario, additional taxes due on the return, added with interest, must be paid before filing your taxes.
Once you have determined your GTI and included the deductions and exemptions, you can calculate your Net Taxable Income (NTI). Any tax return on claiming the credits from prepaid taxes must be paid, including if any interests are imposed before the filing of ITR. Make sure to pay the balance tax by 31st July if the self-assessment value increases by Rs. 1 lakh.
Taxpayers also need to report any exempt income under Section 'Schedule EI,' which includes revenue from agriculture, exemption of taxes on a minor child, and the payment, which is not tax imposed according to the Agreement of Double Taxation Avoidance.
Remember to calculate your taxable income correctly, choose the suitable form, claim deductions, and verify your returns before submission. With these guidelines, you can file your returns with ease and confidence.
TaxNodes is committed to providing our readers with the most reliable and up-to-date information on various finance topics, including taxes. We understand that taxes can be complicated, so we offer expert advice and guidance to help you easily navigate the process. For more information on finances and how to correctly file your taxes, visit TaxNodes today.
byRhea Tripathy
Meet Rhea Tripathy, a word wizard with a pen in one hand and a paintbrush in the other. By day, she slays as a content writer and by night, she indulges in her artistic passion. With a keen eye for the markets and a knack for literature, this certified trader brings her sharp mind and creative flair to everything she does. When she's not crafting clever content, you'll find her analyzing the latest market trends or getting lost in a good book.