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ITR Filing for the First Time: What New Taxpayers Need to Know

Updated: May 29


ITR Filing for the First Time: What New Taxpayers Need to Know

Each year, taxpayers are required to file the relevant Income Tax Return (ITR) and furnish the Income Tax Department with details regarding their earnings and taxes paid in the preceding fiscal year. An ITR's contents must be relevant to the financial year that runs from April 1 to March 31 of the following year. Those who are filing their first ITR often find it confusing. There are a lot of how, where, why, when, and what questions. ITR filing is not as difficult as many make it out to be. You can file your ITR more quickly and easily if you are aware of the tax laws, the filing procedure, and a few other specific facts. If you're completing an income tax return for the first time, you can refer to the excerpt below, where we've outlined the steps for you.  It will serve as a helpful reference for users who are in process of ITR Filing for the First Time

 

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What is an Income Tax Return?

Taxpayers can report all of their income—from all sources—as well as any deductions, investments, costs, and other items. They can then pay taxes to the Income Tax Department or request a refund for any overpayment of taxes. If an Indian citizen's gross total income is over the basic exemption limit, they are required by law to file an income tax return, subject to additional requirements as stipulated by the act. E-filing is the term for the online ITR filing process. You can easily file electronically from the convenience of your own home. An individual's income, investments, deductions, and tax-saving investments made during a specific financial year are all detailed in their Individual Tax Return (ITR). Seven ITR forms—ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7—have been made available by the tax department for submitting income tax returns. (Forms are important for individuals, companies, firms, etc).


Process for Filing Income Tax Return

Registering on the portal is the initial step if this is your first-time filing income tax returns. Moreover, it is imperative that an ITR be filed prior to the deadline for ITR filing. Typically, July 31st is the deadline for submitting an ITR each year. In order to register on the portal, please follow the steps below:

Step 1: Go to https://www.incometax.gov.in/iec/foportal, the e-filing website.


Step 2: Click "Register." Then, click "Taxpayer."


Step 3: After entering your PAN information, select "Validate." Next, select "Continue." 


Step 4: Enter your information, including name, address, gender, and so on. 


Step 5: Next, provide your registered mobile number and email address.


Step 6: Click "Continue" once the form has been completed.


Step 7: An OTP will be given to the registered email address and phone number when you have verified the information. 


Step 8: Enter the OTP. Following the OTP's verification, you'll be taken to a new window where you'll be asked to confirm the information you submitted.


Step 9: You can make additional edits to the details if there are any mistakes. After that, a second OTP will be provided to confirm the modifications. 


Step 10: Lastly, you'll need to configure a secure login message and password. 


Step 11: Select "Register." An acknowledgement message on the registration process's success will be sent to you.


After registering, you are able to submit an ITR. Make sure you figure out your after-deduction taxable income and select an ITR form according to your tax classification. Here are the steps you need to follow to file your income tax return:

Step 1: Go to the official e-filing website.


Step 2: Click "Login"; then, click "Continue" and provide your password. 


Step 3: Upon accessing the portal, select "e-file." Next, select "File Income Tax Return." 


Step 4: Click "Continue" after selecting the assessment year.


Step 5: Choose "Online" as the filing method. Click "Individual" if you are a person.


Step 6: Select the ITR form. You will now be asked to enter your bank account details.


Step 7: Provide a reason for completing your ITR. If you have submitted your bank account information, pre-validate it. 


Step 8: Following that, a new page where you can file your ITR will be displayed to you. Remember to review the information on this page to ensure it is accurate. Validate your ITR summary after you've confirmed it. 


Step 9: Last but not least, you must confirm your income tax returns. Send a copy to the Income Tax Department after that.


Documents Required for Filing ITR

ITR Filing for the First Time? You must know the documents required for filing your ITR so that you can have them handy:

  • Aadhaar Number

  • PAN

  • Form 16

  • Form 26AS

  • Form AIS/TIS

  • Bank account details

  • Other Income information

  • Investments details (if any)

  • Details of unlisted equity shares

  • Monthly salary slips (salary income)

  • Payment of balance taxes

  • Details of Directorship in Indian and foreign companies

  • Various disclosure requirements 

  • Schedule of assets and liabilities

  • Schedule of foreign assets


Things to Consider While Filing Your Taxes as a First-Timer or ITR Filing for the first time

Filing your ITR as a beginner might seem confusing, but professional guidance can help you prepare for the process. Here are a few things to bear in mind while filing for the first time.


Check Your Income Sources

Earnings, expenses, investments, and deductions make up income. Because of this, it's critical to reveal all relevant information from all sources, including investments and rent, regardless of whether it's taxable or not. It is imperative that you include all of your sources of income in your ITR declaration. Additionally, even if your total income is less than the taxable limit, there are situations in which it is crucial to record your income or assets in the ITR. Filing an ITR may therefore be made simpler by assembling all the necessary paperwork and maintaining an accurate record of all transactions and income.


Understand Your Deductions

While filing the return, a variety of deductions can be taken into account. Prior to considering the deduction, all necessary conditions must be met. Sections 80C, 80D, 80E, and so on allow for deductions. Nevertheless, the majority of the deductions are only allowed under the previous income tax system and not under the current one.


Know About Relevant Slab and Regime

It is critical to understand to which tax bracket you fall. Whichever slab applies to you determines how much income tax you must pay. Lower tax rates are provided under the new tax system unveiled in Budget 2023, although the majority of the deductions and exemptions granted by the previous tax system are not permitted. The individual income tax slabs under the new tax regime for FY 2023–24 (AY 2024–25) are as follows:

  • Up to Rs. 3,00,000: NIL

  • Rs. 300,001-Rs. 6,00,000: 5% (Tax Rebate u/s 87A)

  • Rs. 6,00,001-Rs. 900,000: 10% (Tax Rebate u/s 87A up to Rs 7 lakh)

  • Rs. 9,00,001-Rs. 12,00,000: 15%

  • Rs. 12,00,001-Rs. 1500,000: 20%

  • Above Rs. 15,00,000: 30%

Under the previous tax system, taxpayers were able to claim a number of exemptions and deductions, including the House Rent Allowance (HRA), Leave Travel Allowance (LTA), and deductions under Sections 80C and 80D, among others. Three categories comprised the previous Income Tax regime: 

  • All non-residents plus Indian residents under 60 years of age 

  • 60 to 80 years old resident senior citizens 

  • Over 80 years old super senior citizens

The Income Tax Act of 1961's previous tax regime's income tax slabs are listed below:


Individuals (Below 60 Years) and HUF

  • Up to Rs. 2.5 lakh: Nil

  • Rs. 2,50,001- Rs. 3 lakh: 5%

  • Rs. 3,00,001 to Rs. 5 lakh: 5%

  • Rs. 5,00,001 to Rs. 10 lakh: 20%

  • Above Rs. 10 lakh: 30%


Senior Citizens (60- 80 Years)

  • Up to Rs. 2.5 lakh: Nil

  • Rs. 2,50,001- Rs. 3 lakh: Nil

  • Rs. 3,00,001 to Rs. 5 lakh: 5%

  • Rs. 5,00,001 to Rs. 10 lakh: 20%

  • Above Rs. 10 lakh: 30%


Super Senior Citizens (80 Years and Above)

  • Up to Rs. 2.5 lakh: Nil

  • Rs. 2,50,001- Rs. 3 lakh: Nil

  • Rs. 3,00,001 to Rs. 5 lakh: Nil

  • Rs. 5,00,001 to Rs. 10 lakh: 20%

  • Above Rs. 10 lakh: 30%


Fill Up the Form 16 and 16A

The Tax Deducted at Source (TDS) certificates are Form 16 and Form 16A. Form 16 is divided into two sections, Part A and Part B, and is specifically related to salary income. On the other hand, TDS on revenue sources other than salaries is covered by Form 16A. Companies provide Form 16 each year to salaried workers; it contains details about their income, investments for tax savings, deductions, and any TDS for that particular fiscal year. To file income tax returns, you must have this document. Form 16 is divided between Part B, which breaks down the total amount of tax paid, and Part A, which describes TDS deductions. The IT department has demanded that employers provide Form 16 to workers whose yearly salary exceeds ₹2.5 lakh.


Choose the Appropriate ITR Form

The forms required to file an Income Tax Return (ITR) vary based on your residency status, the sources of your income, and the nature of your income. The ITD provides seven ITR forms. 

  • ITR-1 (Sahaj): This form is for people who make money from a job, a single residential property, and other sources (not including lottery and race horses).(Average income < Rs 50 lakhs)

  • ITR-2: For individuals and Hindu Undivided Families (HUFs) without a business or profession as their primary source of income (income exceeding Rs 50 lakhs) 

  • ITR-3: For people and HUFs with income from their careers or businesses.

  • ITR-4 (Sugam): For people having presumed income from a business or profession, including individuals, HUFs, and firms (apart from LLPs). 

  • ITR-5: For local government agencies, cooperative societies, artificial juridical persons, LLPs, AOPs, and BOIs.

  • ITR-6: For businesses that are not claiming Section 11 exemptions. 

  • ITR-7: For individuals and businesses that must file a return in accordance with sections 139(4A), 139(4B), 139(4C), or 139(4D) (such as trusts, political parties, organisations, colleges, etc.). 

  • ITR-V: After submitting an online ITR, if it is not e-verified, you must print, sign, and mail this acknowledgement form to the Income Tax Department. It is not a filing form.


Verify Your Form 26AS

Form 26AS is an essential document that lists all amounts withheld as TDS or TCS from a taxpayer's various sources of income. In addition, it contains information about high-value transactions the taxpayer made as well as advance tax or self-assessment tax paid. The Income Tax Department maintains this consolidated annual statement, which links tax credit information to the taxpayer's PAN. An extensive synopsis of the data provided by a taxpayer on Form 26AS is called the Annual Information Statement (AIS). AIS will provide interest, dividends, stock market transactions, mutual fund transactions, and other information in addition to the TDS/TCS facts. It also takes taxpayer comments regarding the data shown in AIS in case there are any problems.


Stay on Top of Deadlines

Keeping an eye on the ITR filing deadline is vital. People and HUFs (apart from those in need of an audit): Individuals and Hindu Undivided Families (HUFs) who are not audit candidates have until July 31st of the assessment year to file their ITRs. 

  • Individuals, HUFs in need of an audit, or those with income from a business or profession: The deadline for filing an ITR is September 30 of the assessment year if the individual or HUF is subject to an audit under the Income Tax Act or if they have income from a company or profession. For instance, the deadline would be September 30, 2023, for the fiscal year 2022–2023 (assessment year 2023–2024). 

  • There is an option to file a revised return by the end of the year, or by December 31, 2023, for FY 23–24, for those who file their ITR incorrectly or fail to file by the deadline. There is a penalty for filing a return after the deadline, but you are not required to pay it when filing a revised return.

It's crucial to remember that these are the approximate deadlines; the Income Tax Department may occasionally announce special exceptions, extensions, or modifications. To ensure compliance with the precise deadlines for submitting ITRs, it is advisable to stay up to speed with the most recent notices and recommendations from the Income Tax Department or get advice from a tax specialist. 


E-Verify Your ITR

Verification is the last step after filing your ITR and can be completed online or offline. You can access and validate your return online with the Aadhaar One Time Password (OTP). To electronically verify the process, an e-verification email will be sent by the income tax department. Sending a signed printout of the ITR to the Centralised Processing Centre (CPC) in Bengaluru is necessary for offline verification.


Conclusion

Hopefully, by bearing in mind the aforementioned points, filing your ITR on your own won't be as challenging. When filing an ITR, you must double-check and confirm all of the information you provide. If you want to avoid facing severe penalties from the Indian government, you should always file the relevant ITRs and pay your taxes on time.


FAQ

Q1. Why should you file an ITR?

Even if you are not required to file your ITR, you should still do so because doing so can benefit you in several ways. The following are a few benefits of filing an ITR:

  • Evidence of net worth 

  • Loan application eligibility

  • Protection against black money

  • Startup funding

  • Carry forward losses

  • Purchasing insurance with high coverage 

  • Credit card application 

  • Additional benefits


Q2. When is it mandatory to file an ITR?

Even if your income is below the basic exemption amount but you satisfy one of the following requirements, you must still file an ITR:

  • More than Rs. 1 crore was deposited into a "current" bank account: Nevertheless, there is no such requirement for deposits made using current accounts at the post office. 

  • Added over Rs. 50 lakh to the "savings" bank account. 

  • Over Rs. 2 lakh was spent on travel abroad. 

  • Spending on electricity surpasses Rs. 1 lakh. 

  • TDS or TCS surpasses Rs. 25,000. This cap is Rs. 50,000 in the case of a senior citizen (over 60 years of age).

  • Company revenue is more than Rs. 60 lakh

  • Professional earnings are more than Rs. 10 lakh


Q3. What will happen if you do not file ITR before the due date?

You could be subject to late filing penalties of Rs 5,000 under Section 234F  if you are required to file an ITR and fail to do so by the deadline. However, late fees are only Rs 1,000 if your total revenue is less than Rs 5 lakh. If you are required to file an ITR and choose not to do so, you risk imprisonment for a period ranging from three months to two years as well as a penalty based on the amount of tax evaded, if any.


Q4. What is the timeline to submit ITR?

If you get a salary, your employer will withhold taxes from your paycheck and send them to the government on your behalf. Ninety percent of any advance tax that is owed must be paid by March 31st of each fiscal year. You can file your ITR return after the fiscal year has ended. Generally, the ITR filing window is open until July 31st of the relevant assessment year. If the deadline for filing ITRs is extended, notices will be sent by the IT department.


Q5. What precautions should I take while filing an ITR?

Make sure you follow these steps to avoid any problems when filing your return and receiving your refund:

  • Connect PAN and Aadhaar.

  • Verify in advance the bank account you wish to use to receive your reimbursement.

  • Select the appropriate ITR before submitting; if not, your return will be deemed faulty, and you will have to submit an amended ITR utilising the appropriate form.

  • Submit the return by the deadline indicated.

  • Check your return, and the simplest approach to confirm your ITR is to use e-Verification (e-Verify Now is the preferred choice).

  • Within the allotted time frames, submit your answers to the notices you got from the ITD.





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