With only one month remaining until the deadline of July 31, 2024, income tax return filing season is at its height. According to the Income Tax Act, if an individual's or an entity's earnings exceed a specific threshold, they must file their income tax reports. If it's someone's first time filing income tax returns (ITRs), it might be a difficult undertaking. To follow the filing process, first-time taxpayers need to be familiar with the fundamental tax rules, deductions, and exemptions.
Form 16
To file an ITR, a salaried person must first obtain their Form-16 from their employer. This certificate, which shows the TDS (Tax Deducted at Source) from wage and other components, is a crucial document that businesses send to their employees. That is why it is significant.
Every month, businesses deduct TDS (Tax Deducted at Source) from employees' paychecks and submit the money to the government. After the salary is deposited into the employees' accounts, this procedure takes place. A thorough document, Form 16 contains all the information required to file income tax returns. Employees must get this form from their employers at the conclusion of each fiscal year. Employers typically provide Form 16s to workers by the end of May or the beginning of June each year.
The Form 16 consists of two sections. An employee's tax deductions are compiled by the company and forwarded to the I-T department on Form 16-A. It does not correspond to Form 16; rather, it shows the employee's tax condition. Form 16 and Form 16-A have distinct functions.
Tax Regime
It's important to remember that there are two different kinds of tax regimes: old and new. For each, there are distinct tax slab rates.
Old Tax Regime
Numerous tax exemptions and deductions are available to people under the long-standing previous tax structure. House rent allowance (HRA), leave travel allowance (LTA), deductions under Sections 80C, 80D, 80CCD(1b), and 80CCD(2) are a few of the often requested exemptions and deductions.
New Tax Regime
As an elective replacement for the current tax structure, the NDA administration led by Prime Minister Narendra Modi instituted a new tax regime on April 1, 2020, for the 2020–21 fiscal year. Finance Minister Nirmala Sitharaman declared that the new tax system would now be the default in the Union Budget proceedings for 2023.
The New Tax Regime is applicable to all taxpayer groups, including individuals, Hindu Undivided Families (HUFs), and Association of Persons (AOPs), and it includes updated tax slabs and concessional tax rates. According to the present rules, deductions will be computed using the New Tax Regime in the event that taxpayers neglect to disclose their preference to their employer. It is important to remember that there are restrictions on the new tax system. Since these benefits were intended for the Old Tax Regime, exemption claims for deductions like House Rent Allowance (HRA), Leave Travel Allowance (LTA), Sections 80C and 80D, among others, will not be available under the current regime.
Total Income Subjected to Taxes
New tax filers ought to be aware that there is a standard deduction available. Tax deductions and exemptions must be deducted from gross earnings in order to determine their taxable income.
Expenses that you can deduct from your total income to reduce the amount of income that is taxable are referred to as tax deductions. Health insurance costs, house loans, student loans, and gifts to charity are a few of the typical deductions in India. Certain sums of money are known as tax exemptions, and they can be subtracted from your total income to lower your taxable income. In India, there are some allowances that are exempt from taxes up to a certain amount, such as Leave Travel Allowance (LTA), Travel Allowance, and Housing Rent Allowance (HRA).
Form 26AS
Form 26AS is your annual tax statement that includes important information about your income sources and data about your tax deductions and collections. An extensive summary of all available revenue sources is included in this paper, including professional receipts, business profits, salary earnings, and interest on bank assets.
Furthermore, the data on Form 26AS is taken from tax returns filed by organizations that are in charge of withholding or collecting taxes, such as banking institutions, employers, deductors, and collectors. The Income Tax Department receives these facts on a quarterly basis. Furthermore, information on tax deductions connected to transactions involving virtual assets and real estate is also recorded on Form 26AS.
Statement of Annual Income
A taxpayer's financial information, as shown in Form 26AS, is summarized in detail in the Annual Information Statement (AIS). It contains details on mutual fund transactions, interest, dividends, stock market activity, Tax Deducted at Source (TDS), and Tax Collected at Source (TCS). The AIS provides a thorough summary of tax deductions, payments, and financial activity, supplementing the data found on Form 26AS.
Before beginning the download process, taxpayers must register with their PAN as the user ID on the Income Tax portal (incometax.gov.in) in order to access Form 26AS and the AIS.
Documents required for ITR Filing
1. Aadhaar and PAN
2. Form-16
3. Certificates of Interest
4. Annual Disclosure
5. A Form 26AS
6. Details of capital gains
The following are examples of tax-saving investment and expenditure proofs:
> Life insurance policy premiums paid
> Equity Linked Savings Schemes (ELSS) investment amount
> Employee Provident Fund (EPF)
> Public Provident Fund (PPF)
> National Pension System (NPS)
8. The lender's Home Loan Statement
