- Filing of taxes isn’t a rocket science, however, it needs preparation and time
- Knowing all your income sources, forms and deductions is the key to save time
- Keep all your documentations related to your finances ready
Instead of being confused about filing your taxes for the first time, read our list here to know everything that would make your first experience of e-filing easier and fast.
1. Period for tax calculation
First thing first. Those who are going to file their income tax return for the first time must know the difference between calendar year and financial year. The calendar year begins on 1st January of every year and ends on 31st December of every year whereas the financial year starts on 1st April of every year and ends on 31st March of every year. The tax is calculated at the end of every financial year.
2. Know your tax slab
Given below is the tax slab for individuals below 60 years of age:
Individual Tax Payers & HUF
Income up to Rs 2,50,000
Income from Rs 2,50,000 – Rs 5,00,000
Income from Rs 5,00,000 – 10,00,000
Income more than Rs 10,00,000
Those who are above 60 years of age, get the exemption limit at Rs. 3, 00,000 whereas for those who are above 80 years of age, it is capped at Rs. 5, 00,000.
3. You can file your taxes either online or offline
A lot of things in our list depends on how you plan to file your tax. With an increase in internet literacy, more tax payers are turning to tax software or online filing. The first-timers, however, might not feel confident enough to complete and fill their returns online and may prefer personal advice and help from an accountant. First of all, decide whether you wish to opt for an accountant or want to fill the form online. Take your time to thoroughly weigh all your options.
Those opting for accountants need to do due diligence at all levels. You can ask around for some references or may use the accountant that your father has been going to.
Those with income accounting for Rs. 5, 00, 000 or more, have to e-file.
4. Understand that it is a lengthy, time-consuming process
You must know that the deadline for filing your income tax returns (ITR) is 31st July 2018 (for individuals) and 30th September 2018 for businesses. We know it sounds like a lot of time has been left for you to file your taxes but most of the times, first-timers get intimated by the whole process and this slows down their process. Before and while filing taxes, you might have hundreds of questions and issues, therefore, it is advised that you start filling your taxes well in advance to avoid confusions and mistakes.
5. Required documentation
To file your taxes, you are required to have the following documents handy:
- Permanent Account Number (PAN)- it is mandatory for tax filing in India
- Bank account number along with IFSC
- Address and its proof
- Mobile number
- Email id
6. Categorize your income
While filing taxes, you must know that it is critical to identify the different sources of income as all of them are analyzed to measure your taxability. Your income is essentially categorized under the following heads:
- Income from salary
- Income from house property
- Income from capital gains
- Income from business and profession
- Income from other sources
7. Get withholding tax certificates from your employer
If your income comes through your salary then your employer must have provided you Form 16 and 12BA. The tax return is calculated on the salary income on the basis of the withholding tax certificate. The employers often provide the Form 16 and Form 12 BA on their own. Have you received these forms from your employer? If not, then ask them to prioritize the task of providing you these tax certificates.
Form 12BA is given by those employers who provide additional benefits to their employees other than their salary such as educational loan facility or home loan facility.
8. Deductions on investments
Under Section 80C, investments up to Rs. 1, 50, 000 made under PPF, NSC, Life Insurance plans, and ELSS qualify for tax deductions. This also includes your contribution towards EPF through your employer however, that’s already taken into the account in your Form 16. Provide the details of all your investments to your employer to get them captured in your Form 16.
9. Applicable forms
A salaried individual has to fill either of the forms:
a. ITR1 – for those who have income from salary or one house property (not a case of brought forward loss) or other sources (= lottery winnings and profit from race horses aren’t considered).
b. ITR2 – for those Individuals/Hindu Undivided Family (HUF) who do not have income from business or profession
c. ITR2A – it is applicable to an individual/ HUF with more than one house property and no income from any business or profession and Capital Gains and those who do not own foreign assets
10. Know what follows
After you have filed your income tax return, you need to collect the form ITR- V, which is generated immediately after you have e-filed. V denotes verification. Download this form as it is needed to verify the summary given in the form. You have to print this form, send it to the Central Processing Centre of the Income Tax Department within 120 days of filing your ITR. In case of non-submitting the signed ITR-V form within the specified form makes your ITR invalid and thus you have to repeat the process.