Saturday, 24 October 2020

How to File Income Tax Return? 7 Easy Steps

Filing your tax return for the first time? Here are the things you should know before filing your income tax return.

Know 7 Easy Steps to e-file your Income Tax Return

1. Eligibility and Deadline to File Tax Return

The taxable income of an individual exceeds Rs.2.5 lakhs in a particular financial year is required to file the tax return. Taxable income of a salaried individual exceeds Rs, 5 lakhs, it is mandatory to e-file your tax return.

The disadvantage of Delayed Return

  • Tax notice probability
  • Unable to correct errors
  • Delayed refunds, if any
  • Interest on tax liability

2. Difference Between Assessment Year (AY) and Financial Year (FY)

The year in which you have earned income is called Financial Year (FY). The year in which the income is assessed or evaluated i.e. the year immediately following the financial year is called Assessment Year (AY).
How to File Income Tax Return? 7 Easy Steps

The Financial year (FY & AY) starts from 1st April and ends on 31st March.

3. Selecting the Correct Income Tax Form (ITR Form)

Before filing your ITR, you ought to know the ITR form applicable to you. Here is that the list of all the ITR Forms and to what quite incomes they're applicable:

Form ITR-1

Any exempt income
Income from one house
Other sources (excluding racehorses & lottery)
Form ITR-2A

Agricultural income more than Rs. 5,000
Everything from ITR-1
Income from lottery and racehorses
Income/loss from more than one house
Form ITR-2

Everything from ITR-2A
Foreign assets/income
Loss on sale of investments or property/capital gains
Form ITR-3

Everything from ITR-2
Profit share from a partnership firm
Form ITR-4

Everything from ITR-3
Income generated from proprietary professions
Form ITR-4S

Everything from ITR-1
Income from presumptive business

4. Check TDS Details

Form 26AS is your decrease statement which shows all taxes received by the tax department. You can access your Form 26AS from the tax department’s website.

It is extremely important to go through the Form 26AS to ensure that all due credits for TDS deducted from salary, FD interest, etc.are duly accountant for. Any shortfall of TDS reflected within the Form than what's actually claimable within the tax will return to the automatic generation of demand by the tax Department subsequent to the filing of income tax return.

5. To Know About ITR-V

ITR-V stands for ‘Income Tax Return – Verification’. It is a one-page document and summary of your tax return and received when you file your ITR electronically without using a digital signature.

Once e-filing is done your ITR-V needs to be sent to the Centralized Processing Centre (CPC) Income Tax Department in Bangalore by post within 120 days of filing the ITR. or

E-verify your tax return using the bank account or Adhaar OTP within 120 days of filing the ITR.

6. Enter Correct and Complete Information

The income tax department communicates with you by email or phone only. You should always make sure that these two pieces of information is absolutely correct. Receipt of the return form, refund processing alert, notice alert or all send through email or phone.

Ensure that you provide correct bank details. your bank account information is used by the Income Tax Department to refund.

The government had recently made compulsory to link Adhaar number with your PAfN for filing an income tax return.

List all your bank account details on the income tax return.

7. Document Required Before e-Filing

Make sure that you have all the required documents before start filing income tax return. The documents required to file a tax return are

Form 16
Form 16 is provided by your employer to you used you can use it as a reference as well as proof while filing an income tax return. The form has various details such as salary income components, TDS, tax paid by the employer to the income tax department.

Form 16A
Form 16A is also a TDS certificate. While Form 16 is for less than salary income, Form 16A is applicable for TDS on income aside from salary.

Property Details
If you have bought any property or put up the existing property on rent, then the details for rent received and receipts of municipal taxes paid during the year will be needed. If you have bought property by taking the loan, then you need to submit loan certificates for the interest and principal.

Capital Gain statements
It contains details about gains arising from the sale of shares, mutual funds or real estate, and other capital assets during the financial year.

Tax Challans
Through the tax challans, you will need to submit the details of tax payments made by you, if you have paid advance tax or self-assessment payments.

Bank statements
Bank statements of all your operating accounts are needed for arriving at interest income earned during the financial year.

Details of income from outside India
You also need to report details any income which is derived or earned from outside India and details of all the immovable property or capital assets held at any time during the financial year.

8. Declare all Interest Income

All interest income needs to be declared on your income tax return.

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