Tax filing season is here, and you might be on your toes to do the calculations and declare all tax saving options that you have invested in throughout the year. Filing tax can become difficult if you don’t have prior knowledge about the process, or if you are unfamiliar with the various tax saving options available, as first-time taxpayers. However, you must understand that tax-filing becomes easy when you consider certain key aspects. Basic understanding of the concepts can give you relief every time you file an income tax return.
If this is your first time to file an income tax return, here’s:
The essential guide on e filing income tax
Understand Your Applicable Income Slab
Firstly, you must understand the income tax slabs and category you fall under according to your annual income. If you earn less than or equal to Rs 2.50 lakhs in a financial year, you need not pay the income tax. But if your income is above this amount, then you mustdetermine your tax liabilities. Check out various tax slabsfor the financial year 2019-20. There is also an income tax savings limit of Rs 1.5 lakh, which you can use for multiple investments. If you find it difficult to understand various tax slabs, take a professional’s help to file tax.
Include Income from All Sources
You must declare all your income sources and tax saving investments you madein the previous year so that you don’t face any problems in the future. No matter if your total income fallsunder the taxable categoryor not, you must disclose all the information while filing the taxes. Doing this is essential, no matter if you are a salaried individual or self-employed.
Understand Form 16 and 16a
Form 16 and 16a are crucial documents for filing the income tax.For salaried individuals, employers provide these forms during tax-filing. Form-16 is a certificate that declares the tax deducted from your salary by the organization you work for. Form 16a, however, includes the information ofyour other income source, excluding salaries such as rent, commission and interest. Since there is a possibility that tax has been deducted at source, your employer will provide you Form 16a.
Check Form 26a
Form 26a covers all the details of your income that had any TDS deductions. You must check form 16 and 16a before filling this form to give accurate information. You can check the website of the IT department to know the detailed procedures and income tax savings limitalong with the information of various forms.
Choose Your Type of Investment
Under Section 80C, the income tax savings limit is Rs 1.5 lakh, which you can use to reduce your tax liability. There are various tax saving options, such as life insurance, PPF, and fixed deposits, that can help you minimize your net taxable income. These instruments are regarded as some of the best tax saving options currently available. If you have never invested in them before, you must start including them in your portfolio.
While investments into the besttax saving options such as fixed deposit and PPFhelp accumulate a significant amount over time, other tax saving optionslike health insurance and term insurance help you ensure long-term financial security. For instance, Smart Term Plan from Max Life Insurance is known for the comprehensive protection it offers against critical illness or permanent disability in life. With this plan, you can rest assured your family get complete protection when you are not around.
It is also crucial to consider all current and future benefits of all the best tax saving options available so that you can make an informed decision about including them in your financial planning.
Know Everything About Tax Filing
We all become excited when we get out first jobs or first income. But become an earning individual alsocomes with tax liabilities. Although the tips mentioned above are only an essential guide on how to file income tax returns online for salaried employees and the various tax saving options available, you must do your research before taking any step. Also, learn about the income tax savings limit offered under some of the best tax saving options so that you can ensure the safety of your loved ones and yourself against life’s uncertainties.
If you do not understand the various tax saving options or e-filing of income tax, you may want to take a professional’s help. Make sure to take steps only after understanding the concepts and procedures.