As the end of the financial year approaches and the deadline to file income tax returns draws closer, many individuals in India find themselves scrambling to understand the nuances of the tax filing process. Filing personal taxes in India can be a daunting task, but with the right knowledge and approach, it does not have to be. In this comprehensive guide, we will outline the key steps and considerations to help you file your personal taxes like a pro. From understanding different types of income to exploring deductions and exemptions, this guide will equip you with the tools to navigate the tax filing process with ease and confidence. Whether you are a first-time filer or looking to up your tax game, this guide has got you covered!.
Here is a comprehensive guide on how to file your personal taxes in India like a pro:
Step 1: Gather all Necessary Documents
Before you begin the tax filing process, make sure you have all the necessary documents in order. These may include:
• Form 16: This is a document provided by your employer that shows your salary income, tax deductions, and TDS (Tax Deducted at Source) for the financial year.
• Form 26AS: This is a statement that shows the TDS deducted on your income by your employer, bank, or any other entity that has deducted TDS.
• Bank statements: Collect bank statements for all your accounts for the financial year.
• Investment statements: Collect statements for all your investments like mutual funds, stocks, fixed deposits, etc.
• Aadhaar card: Make sure your Aadhaar card details are up to date and linked with your PAN (Permanent Account Number).
• PAN card: Ensure you have a valid PAN card.
Any other relevant documents like rent receipts, medical bills, etc., that you can claim as tax deductions. .
For an elaborate strategy on A Beginners Guide to Indian Income Tax Filing in 2023 click on linked article
Step 2: Understand the Different Tax Forms
There are different tax forms for different types of taxpayers. Make sure you understand which form is applicable to you before you begin the filing process. Here is a quick guide:
• ITR-1: This form is for individuals who have a salary or pension income, income from one house property, and income from other sources, but whose total income is less than Rs 50 lakh.
• ITR-2: This form is for individuals and Hindu Undivided Families (HUFs) who have income from multiple sources, including capital gains, and whose total income is more than Rs 50 lakh.
• ITR-3: This form is for individuals and HUFs who have income from business or profession.
• ITR-4: This form is for individuals, HUFs, and firms who have income from business or profession and whose total income is less than Rs 50 lakh.
• ITR-5: This form is for LLPs, Association of Persons (AOPs), Body of Individuals (BOIs), and other artificial judicial persons.
• ITR-6: This form is for companies other than those claiming exemption under section 11 (Income from property held for charitable or religious purposes).
• ITR-7: This form is for persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) only. .
Step 3: Calculate Your Taxable Income
The next step is to calculate your taxable income. This can be done by adding up all your sources of income and deducting any eligible tax deductions like investments, medical expenses, etc. You can use an online tax calculator to help you with this.Here are the steps to follow:
1) Determine your sources of income: Identify all your sources of income for the financial year, such as salary, rental income, capital gains, interest income, etc.
2) Add up your income: Add up the income earned from each source. If you have multiple salaries, add them together. If you have more than one house property, add the rental income from each property.
3) Deduct any eligible tax deductions: Deduct any eligible tax deductions such as investments made under Section 80C, interest paid on a home loan, medical expenses under Section 80D, etc. Deductions can be claimed up to a certain limit, so make sure you know the maximum limit for each deduction.
4) Calculate your taxable income: Subtract the deductions from your total income to arrive at your taxable income. This is the amount on which you will be taxed.
5) Calculate the tax payable: Once you have arrived at your taxable income, use the income tax slab rates to calculate the tax payable on your income. The tax rates differ depending on your income level and age.
6) Determine if any tax is due: Compare the tax payable with the TDS (Tax Deducted at Source) that has already been deducted from your income. If the TDS is more than the tax payable, then no further tax is due, and you may be eligible for a tax refund. If the tax payable is more than the TDS, then you will have to pay the balance tax amount.
By following these steps, you can calculate your taxable income accurately and ensure that you pay the correct amount of tax. .
Also Read :- Maximizing Your Tax Savings in India Tips and Tricks
Step 4: File Your Tax Return
After you have calculated your taxable income, the next step is to file your tax return. Here's how you can file your tax return online:
1. Visit the Income Tax Department's e-filing portal: https://www.incometaxindiaefiling.gov.in/
2. If you are a new user, register on the portal by providing your PAN, name, date of birth, and contact details. If you are an existing user, log in using your PAN and password.
3. Select the relevant tax form (ITR-1 to ITR-7) based on your income and sources of income.
4. Fill in all the required details, such as your personal details, income details, and tax payments.
5. Check the details carefully and make sure they are accurate.
6. Upload any supporting documents, such as Form 16, Form 26AS, investment statements, rent receipts, etc.
7. Verify the details by using any of the following methods:
• Physical verification: In case you are unable to e-verify your return, you can complete the verification process by sending a signed copy of the ITR-V (Acknowledgment) to the Income Tax Department’s CPC (Centralized Processing Centre).
8. Once your return is successfully filed and verified, you will receive an acknowledgment. You can keep this acknowledgment for your records.
Filing your tax return online is a quick and easy process. It ensures that your tax return is filed accurately and on time, which can help you avoid any penalties or legal issues in the future.
Although we have discussed every step in details yet, filing income taxes can be a confusing and daunting process for many individuals. Seeking professional help from a tax consultant or chartered accountant can be a beneficial option to ensure that you are filing your taxes accurately and maximizing your tax deductions. The professionals are trained and knowledgeable in tax laws and regulations and can provide valuable insights and advice on how to manage your finances effectively. They can also help you avoid costly mistakes that could potentially result in penalties or fines. By entrusting your tax filings to experienced professionals, you can have peace of mind and focus on other important aspects of your life. Whether you are an individual or a business owner, seeking professional help from a tax consultant or chartered accountant can help you save time, money, and stress in the long run. Click Here to connect to a CA for filing your return.
