One of the seemingly most intimidating exercises of adult life is doing taxes. It is important to know how to file income tax returns properly and accurately since this exercise has legal and financial consequences. The computation done in the process determines whether and what amount you have to pay as tax or file for a refund or flag discrepancies. Here’s a handy ITR filing guide:
Get the documents in order:
Before starting with the process in this ITR filing guide, arrange all the required documents pertaining to your income. For a salaried person, these would include the Form 16 given by your employer, the salary slips that your employer issues to you, any invoices you have received payment under, etc. There are other sources of income as well- such as interest income from banks, deposits, investments, so make sure you have the interest certificates for those too. With the help of these documents, you can enter and/or verify the figures stated in the ITR form online.
These documents are important because, often, the employers and banks deduct a certain amount of tax from your income. This is counted as Tax Deducted at Source (TDS). To find your final tax payable, TDS should be adjusted against the tax liability in a particular year. To illustrate this point, Form 16 is a good example. Your employer gives you Form 16 as a certificate, that declares the TDS already deducted when your salary was credited to you.
Once you have all the documents with you, the next step is to summarize all the details from the TDS forms from all the quarters in one place. This is where Form 26AS comes into the picture. It acts as a record of all the tax amounts deducted from your income, indicated against your PAN in a particular financial year. This is the amount that has been deposited already. The Form 26AS is available on the TRACES website when you log in to your account. Under the ‘My Account’ tab, there’s an option called ‘View Form 26AS’. Clicking on the same allows you to download it and verify if the amounts in your TDS certificates match with the figures on Form 26AS. This is a crucial step in how to file an ITR.
At this point, if you find any discrepancy or inaccuracy, you can take it up with the deductor, whether it is your employer, the bank or any other party. The errors should be rectified in Form 26AS in order to proceed with an accurate calculation of the tax payable.
Select the correct Income Tax form
Now you start with the actual process in the ITR filing guide. There are multiple ITR forms available on the website. You need to choose the correct one from among ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7. There are parameters for each of these forms. For example, if you are a salaried person with income less than Rs 50 lakhs in a year, you will choose ITR 1. If you run a business or are a partner in a firm, and your presumptive income is more than Rs 50 lakhs, then the form for you is ITR 3.
Once you are sure of the ITR form applicable to you, you can proceed to fill the form. This exercise of form filing can be done both online and offline, that is, either completely on the portal or offline by generating XML and uploading the excel sheet.
Compute total income and tax liability - claim deductions
The ITR forms will require you to declare all your income under various heads which are Income from Salary, Income from other sources like bank deposits, Income from house property, Income from Capital Gains and finally, Income from Business and Profession. Your total income will be the sum of all the five heads put together.
You can file all your deductions in ITR forms which will include the premium you pay for your life insurance or term insurance policy and other such payments you make towards investments. You can learn more about Term Insurance by browsing the website for the various Term Plans offered by PNB MetLife.
Also, there are other types of expenses allowed as deductions like the interest on repayment of home loan. Keep in mind that the total amount allowed as a deduction under section 80C is capped at Rs 1.5 lakh. Once you arrive at the net income figure, you can compute the tax liability, adjust it against the tax already paid and get the figure for the tax payable in accordance with the current income slabs.
The income tax is levied on all earning individuals who fall under a taxable income bracket. The income tax is paid to the Government of India and is charged annually. However, there are several tax deductions and exemptions that you can claim to lower your tax liability. The Income Tax Calculator helps you ascertain your tax output for a financial year based on your taxable income. This can help you plan well and save tax using the tax-saving deductions and exemptions, if possible.
- *Tax benefits are subject to conditions and other provisions of the Indian tax laws and are subject to amendments made thereto from time to time.
The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.
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