TIPS FOR FIRST TIME TAXPAYERS:-
#Tax payment period and related terms:
Tax is calculated based on the income earned during the period from April 1 of the current year to March 31st of the following year.
This period is called the financial year (FY) and the year in which the income is assessed is called the assessment year (AY).
For example, the income accrued during the financial year 2018-19 is assessed in the assessment year 2019-20.
#Income tax slabs
Taxpayers must determine the income tax slab they fall under to determine their tax liability for a given financial year.
The income tax slabs are designed based on the income range per annum.
Each category of income per annum will correspond to a certain percentage of tax. Additionally, a certain percentage of cess will also be applicable.
Individuals (residents and non-residents) need not pay taxes on income up to Rs 2.5 lakh.
The basic exemption limit is increased to Rs 3 lakh for a senior citizen and to Rs 5 lakh for a super senior citizen.
Form 16 is a TDS certificate provided by an employer for salaried individuals.
This form includes all the salary details to be entered while filing income tax returns.
The latest Form 16 is designed such that it can be directly used to report all the information to be entered in new ITR-1 form.
It consists of information on the deductions you have claimed, the salary earned, and exemptions availed.
Form 16A is another crucial document the taxpayers must rely on for filing his income tax return if he has earned income other than salaries like interest, commission, rent and so on.
Details of tax deducted on such incomes are available in Form 16A which is issued to the taxpayer by the party which has made those payments.
This is also very crucial document which must be relied on for filing tax returns.
It captures details of all the income earned on which there has been a TDS.
Moreover, it is advisable to cross check the details mentioned in Form 16/Form 16A with details appearing in Form 26AS as regards the income and TDS entries.
You can view as well as download your Form 26AS by logging in to TRACES through your PAN.
The details in this form get updated with every TDS return statement, the deductor uploads with the tax department.
Following documents are required for tax filing purpose.
- Bank account details
- PAN card
- Aadhaar details
- Form 16 for salaried individuals
- Investment proofs
- Home loan interest certificate
- Insurance premium payment receipts
#Which ITR form to file:
The nature of income, the amount and the category of the taxpayer are certain factors that help determine which return is applicable to a particular taxpayer.
ITR-1: For resident individuals having income from salaries, one house property, other sources (Interest etc.) and having total income up to Rs.50 lakh.
ITR-2: For individuals and HUFs not carrying out business or profession under any proprietorship.
ITR-3: For individuals and HUFs having income from a proprietary business or profession.
ITR-4: For presumptive income from Business or Profession.