10 Things to be Aware of while filing your taxes
Overwhelmed about filing taxes? This might help
“Financial freedom knows no gender.
When women are equipped with knowledge, opportunity, and support, they have the power to transform their lives and impact generations to come.”
- Christine Lagarde
W: Welcome Story
Ria, an ambitious Indian girl, started earning a year ago and has no idea of how taxes work. Nor does she know the implications of not filing tax returns. Despite notifications and her closed circle reminding her multiple times, she hasn’t filed her ITR.
Today, with less than 10 days left before the July 31st deadline, Ria realized how serious taxes are and the downsides of not filing taxes on time.
She also realized that refunds and loans might take longer than usual, she might have to pay a fine, and her visa process might not be smooth (Yes, Ria is planning for higher studies in the UK.)
She is overwhelmed and confused—since she realized she has limited ITR knowledge. Panic began to grip her as she pondered her next move.
What can she do now?
Like Ria, many young women who are filing taxes for the first time or women who have never filed taxes independently face this situation of panic, having no idea about how to proceed forward.
So we bring you:
10 Things to be Aware of while filing your taxes
Gather all necessary documents:
Collect all the relevant documents—Form 16, salary slips, bank statements, investment proofs, rent receipts, and other supporting documents related to your income, deductions, and investments.
Choose the correct ITR form:
Select the appropriate ITR form based on your income sources and eligibility.
There are seven ITR forms from ITR 1-7.
But the commonly used forms for individual taxpayers are ITR-1 (SAHAJ) for salaried individuals and ITR-2 for individuals and HUFs (Hindu Undivided Families) having income from other sources.
Check for pre-filled information:
Visit the Income Tax Department’s e-filing portal and check if any pre-filled information is available. The portal may have pre-populated details such as salary income, TDS (Tax Deducted at Source) details, etc.
Ensure that these details are accurate and complete.
Declare all sources of income:
Ensure that you declare all your sources of income, including salary, house property, capital gains, business or profession, and any other relevant income. It is important to report all income accurately to avoid penalties or scrutiny later.
Claim deductions and exemptions:
Take advantage of all eligible deductions and exemptions under various sections of the Income Tax Act, such as Section 80C (for investments in specified avenues), Section 80D (for health insurance premiums), and Section 24(b) (for home loan interest), among others.
Reconcile TDS and Form 26AS:
Cross-verify the TDS mentioned in your Form 16 or other TDS certificates with the details available in your Form 26AS. Form 26AS shows TDS details, advance tax, and self-assessment tax paid. If you find any discrepancies, they should be resolved before filing the return.
Double-check computations and calculations:
Ensure that all calculations, including income, deductions, and tax payable, are accurate. Recheck the figures to minimize the chances of errors.
File the return online:
E-filing is mandatory for most taxpayers, except for those above 80 or individuals with income below a certain threshold.
Verify your return:
After filing your return, remember to verify it within the stipulated time. You can do this electronically through Aadhaar-based OTP, net banking, or by sending a signed physical copy of ITR-V to the Central Processing Center (CPC) within 120 days of filing.
Maintain a copy of your filed return, acknowledgment receipt, and all supporting documents. These records will be helpful for future reference, audits, or any follow-up actions.
A: Actionable Steps
Gather all relevant documents and financial records.
Calculate your total income from salary, rental, investments, etc., and determine the applicable tax slabs and rates.
Identify eligible deductions and exemptions and ensure you have proper documentation to support these claims.
Use an online tax filing platform or consult a tax professional to accurately complete and file your income tax return (ITR) form, ensuring you provide accurate information and claim all eligible deductions.
Verify the tax return details, including PAN, bank account, and contact information, before submitting it to the Income Tax Department online or offline, and make the necessary payment if any tax liability is due.
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T: Thought Leadership
“The only thing certain about taxes is that they will change.
Be prepared, be proactive, and be informed.”
- Suze Orman
Suze Orman on the dynamic nature of tax laws:
She highlights tax regulations are subject to frequent changes and taxpayers must recognize this certainty.
To navigate the evolving tax landscape successfully, individuals should stay informed about tax updates, plan ahead, and take proactive steps to optimize their financial situation.
What happened in the last two weeks:
What’s coming up?
Ask Me Anything:
Meeta answers all your finance questions every month. Use this link to join the session and get your queries cleared!
Date: July 23rd, 2023, 6:30-7:30 pm IST
That’s all we have with today’s issue. We’ll see you again in fourteen days.
Until then, don’t delay your taxes like you’ve been doing all along. Go file them now!!