The last date to file income tax returns (ITR) this year is July 31. If you are a Gen Z and filing your ITR for the first time, it would be a daunting process. But don’t worry, we will provide you with everything you need to know about filing an income tax return.
Here is the checklist which you need to keep in mind for filing your returns.
1. Tax regime: Union finance minister Nirmala Sitharaman in her Budget 2023 speech had announced a new tax regime which will be the default tax regime. But the taxpayers will have the option to avail the benefits of the old tax regime.
Amit Gupta, managing director at SAG Infotech, told Hindustan Times,”Depending on your income, deductions, and exemptions, you can evaluate whether the new tax regime or the old regime is more beneficial for you. Consider consulting a tax professional to assess which option suits your specific circumstances.”
2. Deductions under Section 80C: It is considered to be one of the most popular sections of the Income Tax Act as it allows taxpayers to cut their taxable income. It allows for a maximum deduction of up to ₹1.5 lakh per year from a citizen’s total salary during a financial year. Remember, the deductions are not available if you choose to pay tax under new regime.
The investment options under Section 80C are National Pension System, Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF), Senior Citizens Savings Scheme etc.
“In addition to Section 80C, there are other sections under the Income Tax Act that offer deductions. For instance, Section 80D allows deductions for health insurance premiums paid for yourself, your family, and your parents. This can significantly reduce your tax liability while providing essential healthcare coverage. Section 80E offers deductions for interest paid on education loans, making it easier for you to pursue higher education without worrying about the financial burden. Furthermore, Section 80G allows deductions for donations made to specified charitable institutions, encouraging philanthropy while reducing taxable income” Gupta said.
3. Form 15G/15H: They are basically self-declaration forms which a taxpayer submits requesting the bank not to deduct tax deducted at source (TDS) on interest income as their income is below the exemption limit.
On Form 15G and 15H, SAG Infotech’s Amit Gupta said,”This form helps you avoid Tax Deducted at Source (TDS) deductions on interest income from fixed deposits and other sources. It ensures that you don’t pay unnecessary taxes on income that falls below the taxable threshold”.
4. Keep track of expenses: It is extremely important to keep track of the expenses. It is advisable to maintain proper records and receipt of the expenses by which you can claim eligible deductions and reduce taxable income.
“Tax-saving investments play a significant role in reducing your tax burden. The National Pension Scheme (NPS) is a popular option that not only helps you save taxes but also provides retirement benefits. By investing in tax-saving mutual funds like Equity Linked Savings Schemes (ELSS), you can grow your wealth while enjoying tax benefits”, Gupta added.
5. File ITR on time: You must file your income tax return on time to avoid penalties and interest charges. It not only ensures compliance with tax regulations but also prevents unnecessary financial burden. However, Gupta maintained that it is essential to seek advice from a qualified tax professional or chartered accountant, who can provide personalized guidance based on your specific financial situation, help you optimize your tax-saving strategies, and ensure compliance with tax laws.
