10 Things First-Time Taxpayers Should Know Before Filing Income Tax Returns (ITR)

Filing income tax returns (ITR) is a crucial obligation for every individual who earns taxable income. Whether you are a salaried employee, self-employed professional, or freelancer, understanding the process and requirements of income tax return filing is essential. If you are a first-time taxpayer, here are ten important things you should know before filing your ITR.

Total taxable income-

Taxable income is the amount of income that is liable to taxation after deductions for allowed costs and tax avoidance are subtracted from gross income.

Tax regime

The most important decision when it comes to filing an ITR is whether to use the new tax system or the old system. The old tax system allowed for tax savings through deductions and other tax advantages, but the new tax system offers lower tax rates.

Form 16

Form 16 is a tax deducted at source (TDS) certificate issued by an employer to employees. It includes all the salary information that must be included when filing income tax forms. This includes details about the exemptions used, the salary received, and the claimed deductions.

Form 26AS

It is an important document that details all earned income for which a TDS was made. Cross-verification the information on Form 16 against Form 26AS is advised. When the taxpayer submits their TDS return statement, the information on the form is updated.

Documents required

• Form 16
• Insurance premium payment receipts
• PAN card
• Home loan interest certificate
• Aadhaar card information.

Annual Information Statement

The Annual Information Statement (AIS) is a detailed account of all financial activities for a taxpayer within a given fiscal year. It contains data on interest, dividends, stock and mutual fund transactions, and international transfers. The data from the AIS is automatically completed in the return form when a taxpayer chooses the prefill option when filing their income tax return.

ITR Forms-

ITR-1: For residents earning up to 50 lakh in total income from salaries, one residential property, and other sources (such as interest).
ITR-2: For individuals and HUFs not engaged in any proprietorship-based business or profession.
ITR-3: For people and HUFs who make money through their own businesses or professions.
ITR-4: For alleged business or professional income.

Verification

ITR Verification is the last step after filing your ITR both online and offline. You can use the Aadhaar OTP to access the information if you choose the online option. The IT department will send you an e-verification email using the online electronic mode to validate the verification. You must transmit the ITR printout that has been signed to CPC, Bengaluru, in order to use the offline procedure. Beginning on August 1, 2022, the income tax department has shortened the window for taxpayers to submit their ITR-Vs in paper form or electronically to 30 days.

Penalties for failing to file returns

Even though the taxes have already been paid, failing to file income tax returns can cost an individual up to Rs 5,000 in fines. A person must also provide tax returns as proof if they are applying for a loan, intend to buy real estate, go overseas, or buy a sizable insurance policy.

ITR due date

Taxpayers should be aware that the deadline for filing income tax returns is always July 31.