For a large number of people, filing income tax returns can be a terrible job. Most of them do not want to get into the probable hassles involved in it. However, if you put in some efforts and attain relevant pieces of information, income tax return filing will be a breeze. It is not as complicated as a lot of people. All you need to do is to learn about the basic concepts that are involved in the process. Once you get to know about the accurate methods of doing this, you will never have any problems in filing returns all by yourself.
Know about the financial year and assessment year
The first step in understanding the concept of ITR filing is to obtain information about the financial year and assessment year. The period starting from the first day of April of a year till the last day of March in the following year is called FY. The income that you earn during this period will be assessed from the first day of April in the next year; it will be called the AY.
Income tax slabs and brackets
Once you are aware of the concepts relating to the financial year and assessment year, you should find out about the income tax slabs and their relevant tax percentage. The total income that you earn in a specific year will be taken into account for the calculation of the annual income tax. Earlier, people earning less than Rs. 2.5 lacs were not required to pay IT.
Now, this slab has been revised to provide an exemption to all people earning less than Rs. 5 lacs annually. So, if you fall within this income range, then you will have to file your returns stating that your annual income is not taxable under the Income Tax Act.
Your age is also a factor
You must bear in mind that the tax slabs for people below sixty years age is different from those who are above sixty. The rate of taxation will vary when you cross this age. So, it is best that you take this factor into account when you are about to file your IT returns.
Understand the importance of Forms 16, 16 A and 26 AS
Salaried individuals must fill up form 16 to provide information about the income taxes that have been deducted at source (TDS). It is meant for employers to provide relevant TDS information about their employees. Modifications in Form 16 have made the overall process more straightforward than before. All the details mentioned in Form 16 become a crucial part of ITR-1. So, the new system is highly beneficial for all salaried individuals required to pay Income Tax.
Form 16 A is useful in case you are earning income other than your salary. If you have rented a part of your house or other property that you own, then the income that earns from these sources must be mentioned on Form 16 A. Form 26 AS becomes crucial for all people on whose salary deductions have already been made using TDS.
Find out about all the documents required
The IT department mandates you to provide some documents when you are about to file income tax returns. Details of your bank account in the form of a bank statement are needed for this process to get completed. Your Permanent Account Number or PAN card is necessary for ITR filing. Your UID or AADHAR Card is also an essential document to handle this process correctly. If you are a salaried person, then you must fill up Form 16 at the time of ITR filing. In case you have made any investments; then you must provide all the relevant documents proving them.
Which ITR form should you file?
You must bear in mind that there are four significant categories of income tax return forms. ITR-1, ITR-2, ITR-3, and ITR-4 are these necessary forms. Every taxpayer must file the appropriate way, keeping in view the nature of their income. If your income is earned from salaries and some other sources, then you will have to deal with ITR-1. The ITR-2 form is meant for HUFs which do not function under any proprietorship business. HUFs conducting their affairs in the proprietorship format will need to fill out ITR-3. ITR-4 is intended to be filled if you have income from a store or a profession.