header Income Tax

Tips for First Time Taxpayers

Dec 02, 2021
high return tax saving fixed deposit

Your opinion about paying taxes might have already been prejudiced by virtue of the experiences and opinion of your family members, colleagues and friends. But is an exercise that cannot be done away with by virtue of the multiple indirect benefits it has to provide to society at large. But contrary to popular opinion, the process of paying one’s taxes has been greatly simplified in recent times. These are certain things that one must keep in mind if it’s your first-time paying tax - 

Things first-time taxpayers should do while paying taxes

  • Know your income tax slab – 

The tax liability that one has is determined by the income that one is receiving for a financial year. The income tax slab may or may not change every financial year and an individual earning less than INR 2,50,000 is not liable to pay taxes.

  • Have all your proofs in order 

One has to know basic details like Aadhaar Number, PAN Number, Bank Account Number with IFSC Code, contact number and a valid email ID while filling your ITR Form every financial year. Keep these documents handy to ensure that there is no scope for inaccuracy.

  • Know about all the means through which one can save tax 

There are plenty of legal means through which one can enjoy tax benefits on life insurance premiums of up to INR  1.5 lakh as per Section 80C, health insurance premiums of up to INR  1,00,000 are tax exempted as per Section 80D, donations to specific institutions under Section 80G of the Act, etc.

  • Fill and submit the right form – 

There are 4 different forms of ITRs namely, ITR 1 for Individuals with an annual income of a maximum of INR 50 lakh from sources like salaries, etc. ITR 2 for HUFs not involved in a business or profession under any proprietorship, ITR 3 for individuals and HUFs involved in a business or proprietorship, ITR 4 for presumptive income from business or profession having total income up to INR 50 lakh. Also, find out more about Form 16, Form 16A, and Form 26AS, which are indispensable while filing your taxes.

  • Include income from all sources 

Your tax return is complete once you have included income from all sources which contains all kinds of income whether taxable or exempt. 

  • Re-check your calculations

Double-check the math and do so to save yourself from trouble at a later date. Go through your ITR form after you are done filling in the details and meticulously cross verify.

  • Keep proof of the verification and acknowledgment

One can access information via the Aadhaar OTP or Electronic Verification Code. The acknowledgment that is received in electronic or paper form must be duly saved and kept for future references.

  • Keep track of all the TDS and taxes that you’ve paid 

Most of your income might have been subjected to TDS when you receive it, therefore ensure that this is reflected properly in all the documents and you do not pay for it twice over. Also, if you have paid advance tax or self-assessment tax, do not forget to enter the details of it in the tax return, as the tax department will not acknowledge it otherwise.

  • Do consider filing the returns online

Filing one’s taxes online can save considerable time and effort and tax preparation software can run the numbers for you. Also, filing taxes online makes the process cheaper and safer than sending the papers via post. Even the refund will get processed more efficiently and faster.

  • Do stay organised 

To avoid any last-minute hiccups and avoid confusion of any kind, keep all documents, receipts, records in order.

Things first-time taxpayers should not do while paying taxes

  • Do not make a mistake while entering the bank account number, email and contact details, PAN and Tan number, etc.
  • Do not forget to claim deductions under the relevant provisions of the act and back it up with proper documentation.
  • Do not forget about extra sources of income such as capital gains and other miscellaneous sources before filing the returns.
  • Do not wait till the last minute to file tax returns as the scope for error is greater in such cases.
  • Do not mix up the financial year and the assessment year while filling in the details.  This confusion can lead to complications and increased tax liability. 

Any additional tips to keep in mind

  • Plan ahead for tax season by calculating how much you’ll owe. Use the help of online tax calculators.
  • Consult a financial advisor in case of doubt.
  • Your choice to invest in tax-saving schemes must be guided by one’s needs and ability and willingness to take risks.

Conclusion 

Filing your taxes is not rocket science. It just requires a little background work to be done and some occasional assistance at times that you face some difficulty.

Share article with your friends