Your ultimate guide to understand how to file Income Tax return

It's that time of the year again. If you're a taxpayer in India, you would have probably already started collecting your financial documents and gearing up to file your income tax return.

Thanks to the new income tax portal, it's now become easy for taxpayers to file their income tax returns from the comfort of their homes.

But even though the new portal has made the process quite straightforward, first timers can still find it overwhelming.

This is why we've broken down the process into a few simple steps to help you understand how to file your income tax returns without any hassles.

How to File Income Tax Returns?

Step 1: Visit the income tax e-filing portal - https://www.incometax.gov.in/iec/foportal

Step 2: Register or Login

In case you've already registered on the portal, choose the Login option, or else click on the Register Yourself button

Step 3: Click on Taxpayer, enter your PAN details, and click on 'validate'. Next, click on 'continue.'

Step 4: Enter your details (Name, address, gender, residential status, date of birth)

Step 5: Enter your registered mobile number and email ID.

Step 6: Click on 'continue'

Step 7: An OTP will be sent to your mobile number and email address. Enter both the OTPs and follow the instructions given to complete the registration process.

Step 8: Now, you will be redirected to a new page to verify the information you've entered in your ITR form.

Step 9: Check the details and click on 'Submit' or 'Validate'

Now that you've understood how to file an income tax return in detail let's discuss a bit more about this process.

Who Needs to Pay Income Tax? 

Income tax is a type of direct tax levied on an individual's or business's earnings throughout a fiscal year (1st April to 31st March). In layman's terms, it is a fraction of your annual income that must be paid directly to the government through Tax Deducted at Source (TDS), Tax Collected at Source (TCS), and voluntary contributions through banks.

But what constitutes income? Here are the five most notable taxable income sources:

● Salary payments made by an employer

● Capital gains or money earned through the sale of capital assets such as bonds, shares, jewellery, buildings, and so on.

● Renting out a residential property

● Profits and income generated by firms that provide professional services.

● Other sources of income include rental income (other than rental property), pensions, dividends, lotteries, donations, and interest received on debentures and bonds.

However, only the persons and companies listed below are liable to pay income taxes in India:

● Any Indian citizen under the age of 60 with a yearly income greater than Rs. 5 lakhs.

● Corporate entities

● Hindu Undivided Family (HUF)

● Local authorities

● Body of Individuals (BOI)

● Companies

● Artificial Juridical Persons

● Association of Persons (AOP)

So, now that you are familiar with the basics of income tax in India, let's understand how to file income tax returns.

How to Save Tax?

Although it is a legal need in India to pay income tax, the amount of tax you must pay is totally based on your annual income, age, and the slab rates announced by the IT department - which are adjusted every year.

For example, if you are under the age of 60 and have an annual income of Rs. 5 lakhs, you must pay income tax on 10% of your profits. This indicates that your income tax return will be rounded up to Rs. 50,000/-

If you're wondering how to save taxes, the good news is that you may claim many deductions on your ITR under the Income Tax Act of India, 1961, sections 80D, 80C, 80CCC, 80CCD, 80E, 80EE, and 80RRB. These include insurance premium payments, interest on college loans, interest on savings account deposits, and more.

For example, if you pay an annual premium of Rs. 50,000 for a medical insurance policy, you may claim the amount as a deduction when completing your income tax return, which is a wonderful method to maximise your savings.

Wrapping Up

So that about touches upon all you need to know about filing income tax returns, calculating income tax, and saving taxes. As responsible citizens, we need to be honest with our taxes and file them on time.