Income tax return filing: Useful tips for first-time return filers

An income tax return is a yearly statement that declares your income and taxes paid during the year to the income tax department. It will be a little uneasy for first-time return filers to file their income tax returns. However, if one considers below fundamental aspects, the return filing process can become smooth.

Income tax return due date

First of all, remember the last date up to which you can file your income tax returns. An individual earning income from salary or self-employed should file an income tax return before 31st July every year. 

For the financial year 2020-21, i.e. 1st April 2020 to 31st March 2021, the government has extended the deadline of ITR filing to 30th September 2021 from 31st July 2021.

Income tax slabs

From FY 2020-21 onwards, the government has introduced a new tax regime where taxpayers can pay tax at concessional rates after forgoing major exemptions and deductions.

Old tax slab rates:

Tax Slab Rates
Up to Rs 2.5 lakh  No tax
Rs 2.5 lakh to Rs 5 lakh 5%
Rs 5 lakh to Rs 10 lakh 20%
Above Rs 10 lakh 30%

The senior citizens and the super senior citizens enjoy the benefit of a higher basic exemption of Rs 3 lakh and Rs 5 lakh, respectively, in the old tax regime.

New tax slab rates:

Tax Slab Rates
Up to Rs 2.5 lakh No tax
Rs 2.5 lakh to Rs 5 lakh 5%
Rs 5 lakh to Rs 7.5 lakh 10%
Rs 7.5 lakh to Rs 10 lakh 15%
Rs 10 lakh to Rs 12.5 lakh 20%
Rs 12.5 lakh to Rs15 lakh 25%
Above Rs 15 lakh 30%

Note that while computing the tax under both the tax regime, you are liable to pay 4% health and education cess upon the income tax amount and surcharge, if applicable.

If your total taxable income is below Rs 5,00,000, you are eligible for a tax rebate under Section 87A of up to Rs 12,500, i.e. up to Rs 5 lakh, there is no tax liability under both the tax regime.

Taxpayers opting for a new tax regime in the FY 2020-21 should submit Form 10IE with the income tax department. 

Hence, the taxpayer should compute the tax liability according to the suitable tax regime. It is important to pay tax before filing the income tax return.

Collect basic information

ITR filing starts with your basic information. Be ready with your PAN, Aadhaar number and bank account details like bank account number and IFSC code. Also, link your Aadhaar number with PAN before 30th September 2021. The government has made it mandatory to link your Aadhaar number with PAN.

Collect income documents

It is necessary to show all sources of income in your income tax return. Collect all the documents related to your income sources, such as Form 16, Form 16A, bank account passbook/statement, capital gains statement for the sale of shares or mutual funds, and other income receipts.

Even if the income is exempt from tax, you should declare it under the exempt income section of the ITR. 

Investment documents

You can claim a deduction from your gross total income for certain investments or expenditures incurred during the financial year. The can deductions can be for LIC premium, school tuition fees, health insurance premium, donations, National Pension Scheme (NPS), etc. You can claim them under Chapter VI A deductions. Hence, ensure that you don’t skip to claim any of the eligible deductions. You can compile all related receipts and documents and keep them handy while filing the return.

Form 16, Form 16A, and Form 26AS

Form 16 is a TDS certificate of tax deducted during the year by the employer. It also has a breakup of salary, i.e. allowances, perquisites, deductions, etc. Hence, Form 16 is a crucial document for salaried employees as they have to rely on it for filing income tax returns. 

Form 16A is a TDS certificate issued for tax deducted on incomes other than salary. For example, banks issue Form 16A to its customer for tax deducted on interest payment on deposits during the year. Similarly, it is issued for tax deducted on various other incomes. 

Hence, Form 16 and Form 16A are essential documents for claiming TDS credit deducted on your behalf.

Form 26AS is a statement containing information about the tax paid by, or on behalf of, the taxpayer during the financial year. For example, TDS/ TCS, advance tax, self-assessment tax, etc. The deductor deducts TDS and submits the details in the TDS return to the income tax department mentioning the PAN of the deductee. Later on, such information reflects in Form 26AS of the PAN. Hence, one should cross-check the details of Form 16 and Form 16A with Form 26AS. It will help if you rectify any mismatch immediately by requesting the deductor. Otherwise, there will be a delay in the processing of your income tax return.

ITR Forms

The ITR forms are not solely dependent on the income source but also on the amount of income and the category of the taxpayer. Individuals can file ITR returns under below Forms:

  •  ITR-1: Resident individuals having income from salaries, one house property, other sources, agricultural income below Rs 5,000 and having a total income of up to Rs 50 lakhs
  • ITR-2: Individuals and Hindu Undivided Families (HUFs) not having any business or profession under any proprietorship.
  • ITR-3: Individuals and HUFs having income from a proprietary business or profession.
  • ITR-4: Individuals and HUFs having presumptive income from business or profession.

Thus, income tax return filing is a simple process. You can use the above tips and file your return in a hassle-free manner.

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