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How to File an Income Tax Return if You are a First Time Taxpayer | YES BANK

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As a first-time taxpayer, you may find the task of filing your income tax return daunting. You may have difficulties in decoding the technicalities of the Income Tax Act (ITA). Here’s a step by step guide to help you file income tax return based on your income.

  1. Calculate all your sources of income.
    To file your income tax return, you need to determine the tax rate applicable to your income. But first, you need to calculate the total annual income you earned from different sources in a year. The different categories of income include:

  • Salary

  • House/ property (rent)

  • Interests on investments/ capital gains

  • Income from business/ profession

  • Earnings from other sources (savings bank accounts, bank deposit interests, pension, etc.)

If you have several sources of income, you can take help from a financial expert/ Chartered Accountant (CA) to avoid any miscalculation. Incorrect tax computations can lead to penalties.

  1. Check the income tax slab to determine your tax liability.
    After you compute the total income you earned in a year, you have to check out the slab rates listed under the ITA. It will help you determine the slab under which your income belongs.  Here’s a table of the tax slabs for individuals below age 60 and the taxable percentages as per the old and the new tax regimes in India1. You can choose to file your income tax return as per the old regime or the new one.

 

Income Slab
Tax-rates (Old regime)
Tax-rates (New regime)
Up to ₹2,50,000
Nil
Nil
₹2,50,000 - ₹5,00,000
5%
5%
₹5, 00, 000 - ₹7, 50, 000
20%
10%
₹7,50,000 - ₹10,00,000
20%
15%
₹10,00,000 - ₹12,50,000
30%
20%
₹12,50,000 - ₹15,00,000
30%
25%
Over ₹15,00,000
30%
30%

The tax slabs differ for senior citizens between 60-80 years of age and for super senior citizens, aged above 80 years. The ITA also provides some exemptions and deductions in income tax to the taxpayers under various Sections of the Income Tax. The prominent Sections here for individuals and HUFs are:

  • Section 80C

  • Section 80D

  • Section 80EE

  • Section 80GG

  • Section80G

  • Section TTB

  1. Pay your income tax as per applicable slabs.
    Deduct from your gross income taxes you may have already paid as Tax Deductible at Source (TDS) and advance tax. Factor in deductions under various sections of the ITA for which you qualify. If your net income after such deductions exceeds the tax threshold, you must pay your taxes according to the applicable percentage.

  2. Keep these documents ready before income tax filing.
    You will need the following documents:

  • Identity proof

  • Address proof

  • Bank account statements

  • Salary slips

  • Permanent Account Number (PAN) card

  • Aadhaar card

  • Digitally signed certificates for TDS

  • Interest certificates for your investments

  • Capital gains statements

  • Form 16 from your employer

  1. Fill the right ITR form.
    Next, you have to fill the ITR form depending on your source of income. The forms start from ITR-1 and go up to ITR-7. The selection depends on the taxpayer category (Individual, HUF, Company) and the source of income. The income tax e-filing website has a detailed list of the forms and the instructions to fill each type.

  2. File your ITR online/offline.

At last, you can file your income tax return.  Today, most taxpayers file income tax online as the process is quick and straightforward. You just have to visit the website https://www.incometaxindiaefiling.gov.in/home, register yourself, and upload the necessary documents. Finally, you must verify your ITR either electronically or via physical methods.

Conclusion

A clean tax record establishes trust with financial institutions. You will also need your ITR receipt for processes like visa application. Follow this guide and complete your income tax filing on time.

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