The tax-filing season can be stressful, even for the regular taxpayer who has been filing his returns for years. And, it will be all the more if one is a first-time taxpayer. However, you must understand that filing income-tax returns can be quick and smooth as long as certain key aspects are taken into consideration. Let us talk about nine important points that you as a first-time taxpayer should keep in mind this financial year.
1. Understanding the income slab you fall under
First and foremost, you need to determine the income slab you fall under to determine your tax liability for a given financial year. Individuals (residents and non-residents) need not pay taxes on income of up to Rs 250,000. Beyond this limit, their income becomes taxable based on slab rates prescribed under law. This basic exemption limit is increased to Rs 300,000 for senior citizens and to Rs 500,000 for super senior citizens.
2. Basic details for tax filing
As a first-time taxpayer, be equipped with certain basic details for your return filing, like PAN, Aadhaar Number, Bank account number with IFSC code, mobile number and a valid email id.
3. Include income from all sources
Your tax return is complete in all respects if you have included income from all sources. Here it is important to note that all income, whether taxable or exempt, needs to be included.
4. Form 16
This is a crucial document that you need to rely on for filing your return. If you are earning income under the head salaries, the employer will provide you with Form 16. It is the certificate of the tax deducted by the employer on your salary for the year. This form includes details of salary, perquisites, taxable and exempted allowances, etc. The employer should provide Form 16 by June 15 every year.
5. Form 16A
If you are in receipt of income other than salaries which are in the nature of, say, interest, commission, rent, etc, there are chances that tax was deducted on such income, too. Details of such TDS is available in Form 16A, which would be issued to you by the party which has made these payments to you. This form again helps you with details of other income you have earned and also in claiming credit of TDS on such other income while filing your return.
6. Form 26AS
This is again a very important document you must rely on for filing your return which captures details of all your incomes on which there has been a TDS. Moreover, it is advisable that you cross check the details mentioned in your Form 16/Form 16A with details appearing in Form 26AS as regards your income and TDS entries. You can check your Form 26AS by logging on to the income tax efiling website. The details in this form gets updated with every TDS statement the deductor uploads with the tax department.
7. Investment-related documents
Talking about tax-saving investments, you can claim a deduction of up to Rs 150,000 under Section 80C. Besides 80C, there are other deductions you can claim, such as 80D on medical insurance, 80G on donations you make to specified institutions, etc – All of which bring down your taxable income. So, make sure to consider them all while filing your return.
8. Which income tax return to file?
The nature of income, the quantum and the category of taxpayer you fall under are certain factors that help you determine which return is applicable to you.
Here is a quick look at the relevant ITRs and when they are applicable:
a. ITR-1: For individuals having income from salaries, one house property, other sources (interest, etc) and having a total income of up to Rs 5 million.
b. ITR-2: For Individuals and Hindu undivided families (HUFs) not carrying out business or profession under any proprietorship.
c. ITR-3: For individuals and HUFs having income from a proprietary business or profession.
d. ITR-4: For presumptive income from business or profession.
9. How to file your return
One should not look at income-tax filing as a painful exercise. Even though online tax filing has become mandatory for all taxpayers, it is much simpler and does not require too much effort.
The author is founder & CEO of ClearTax