Filing ITR for the first time? – Here’s what you need to know

Article covers When are you actually required to file your ITR, Are there any benefits of filing ITRs, What is the due date of filing ITR, What you need to consider before filing ITR and Points to ponder at the time of filing ITR.

Once you start earning money, don’t forget some portion of your online income belongs to the government.

Yes! You need to pay taxes & file income tax return.

The very thought of it brings a mixture of pride and fear that tends to engulf. No, worries in this guide we will explain you basics of taxation.

When are you actually required to file your ITR?

Before rushing in for filing income tax returns, you need to know whether you are actually liable for filing ITRs or not.

Some assume that the day they are allotted Permanent Account Number (PAN) by IT Department, they become liable to file ITR while employees generally think that since their employer has deducted TDS on salary paid to them, they don’t need to file ITR.

In actual, you need to file your ITR if your gross total income exceeds basic exemption limit. For FY 2019-20, the basic exemption limit is Rs. 2,50,000.

Hence if gross total income i.e. income from all sources before allowing any deductions u/s 80C to 80U exceeds Rs. 2,50,000, you have to mandatorily file ITR.

Apart from these some other instances when ITR is to be mandatorily filed can be outlined as

• You want to carry forward loss under any head of income
• If you are a resident individual and possess any movable or non-movable asset including a bank account overseas
• If you are resident individual and signing authority in foreign account

Special Point – Company or firm has to mandatorily file ITR even if it earns losses during the FY.

Are there any benefits of filing ITRs?

Whether you want to claim refund of TDS deducted by employer on salary paid to you, or you want to buy home loan, or you want to build capital, filing ITR is very essential. Also while applying for VISA, you need to submit ITR as one of the documents. What more, filing ITRs is extremely effortless and quick process. You need to just upload Form 16 and basic details, and does the rest for you.

What is the due date of filing ITR?

In case of individual taxpayers whose accounts are not required to be audited can file the return even after 31^st July which will be called as belated return. But belated return brings certain interest and penalty provisions with itself. Also loss arising from heads of income cannot be carry forward if return is filed after 31^st July. Hence it must be filed within time.

What you need to consider before filing ITR?

Review Form 16 (in case of salary) or Form 16A (in case of other income) to check TDS deducted on income paid to you. Also check 26AS i.e. tax credit statement to ensure correct TDS has been deducted by deductor and deposited in government treasury.

Points to ponder at the time of filing ITR

Check the expense and investment receipts twice to ensure they can be claimed as deduction. LIC premium, children tuition fees, home loan repayment are some expenses that can be claimed as deduction. Sometimes some conditions are to be fulfilled for a particular expense to become eligible for deduction, hence those conditions must be specifically checked.

For individuals whose net taxable income is below Rs. 5,00,000, IT department has provided rebate of maximum Rs. 12,500 under section 87A of Income Tax Act, 1961. This rebate can be availed to reduce the tax liability.

Also, bank account details must be correctly entered in income tax return since refund will be credited by IT department. in the bank account mentioned in ITR.

Apply basic principle of ‘Mahabharat’

Without thinking about end result (proceedings to be conducted by Income Tax Department), keep performing your tasks (filing ITR on timely basis). The benefits are enormous which can be unfolded only if you pay taxes and report income to IT department on time.