Tuesday, December 17, 2024

First Income Tax Return

 


Yesterday, I felt a sense of pride combined with humility when a NRI client, whom we have been serving for over 15 years, informed us that he wanted to start filing ITRs for his daughter, J. Incidentally, this client was introduced to us by his father, making J the third-generation client from the same family.

A few minutes later, J, a 25-year-old self-employed professional, called and inquired about how to file her first ever Income Tax Return.

Filing Income Tax Return for the First Time

Filing an Income Tax Return (ITR) for the first time can be a daunting task. However, with some basic understanding and preparation, it can be completed smoothly.

Filing an ITR is not just about fulfilling a legal obligation; it also helps build financial discipline, secure loans, claim refunds, and stay compliant with tax laws.

If an individual's annual income exceeds the specific threshold limit, they are required to file the ITR. Even if their income is below the threshold, filing a return can be beneficial to claim refunds or serve as proof of income for various financial needs.

Step 1: Collect Documents

Before starting, gather all the necessary documents:

PAN Card, Aadhaar Card, Form 16 (if salaried), Bank Statements, Investment Proofs, Form 26AS



Step 2: Choose the Right ITR Form

The Income Tax Department offers different ITR forms for various income types. As a first-time filer, one is most likely to use:

ITR-1 (Sahaj): For salaried individuals, pensioners, or those with income from one house property and interest income.

ITR-2: For individuals with capital gains or foreign income.

ITR-4: For those with presumptive business income.

Ensure the form relevant to the income sources is selected.

Step 3: Calculate Taxable Income

To calculate taxable income, add all income sources, including salary, interest, rental income, or freelance earnings. Then subtract eligible deductions under sections like 80C, 80D, 80TTA, 80 TTB, etc

The balance after deductions is taxable income. Use the applicable tax slab rates to determine tax liability.


 

Step 4: Pay Any Pending Tax

If the employer has not deducted sufficient tax or if there is additional income, the remaining tax needs to be paid. Use the Income Tax Department’s portal to calculate and pay the amount. A challan receipt will be received, which needs to be mentioned in the ITR.

Step 5: File the Return Online

To file the ITR visit the official Income Tax e-Filing portal, Log in using the PAN, Choose the appropriate ITR form, Fill in all the required details like income, deductions, and tax paid, Verify the information carefully before submitting.

After submission, an acknowledgment number will be received.


 

Step 6: Verify the ITR

The ITR filing is incomplete without verification. It can be verified through: Aadhaar OTP, Net Banking or by sending a signed Copy. Select the one most suitable.

Conclusion

To sum up, filing an income tax return for the first time might seem complicated, but it is a simple process if prepared well. Start early, collect all necessary documents, and follow the steps systematically. If difficulties arise, consult a Chartered Accountant who is experienced in this field, to ensure accuracy. Filing the ITR on time will not only save from penalties but also empower better financial management.

The content made available in this article is for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the content, it should not be considered as a substitute for professional consultation. 

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