Kickstart Your Tax Journey: Why First-Timers Need Guidance
Filing income tax for the first time can feel overwhelming. Between choosing the right ITR form, gathering documents, and making sense of deductions, it’s easy to feel lost. But here’s the good news—navigating taxes is a lot simpler when you understand the basics.
Whether you’re a salaried professional, freelancer, or starting your first business, this guide breaks down the essentials. Filing your taxes correctly not only keeps you compliant but can also help you save money and make smarter decisions in your personal finance journey.
1. Understand Who Needs to File Taxes
If your gross total income exceeds the basic exemption limit in a financial year, you are required to file an Income Tax Return (ITR) in India.
- For individuals below 60 years: Income above ₹2.5 lakh requires filing.
- For senior citizens (60-80 years): Threshold is ₹3 lakh.
- For super senior citizens (80+ years): Limit goes up to ₹5 lakh.
Even if your income falls below these thresholds, you might still want to file taxes to claim refunds or establish financial records for loans or visas.
2. Choose the Right ITR Form
Picking the correct Income Tax Return form is important. Using the wrong one can delay your return or get your filing rejected.
Commonly Used Forms:
- ITR-1 (Sahaj): For salaried individuals with income up to ₹50 lakh, including house property and interest income.
- ITR-2: For individuals with capital gains, foreign income, or more than one house property.
- ITR-3: For professionals or business owners who have income from proprietary businesses.
- ITR-4 (Sugam): For those under the presumptive taxation scheme (mainly for small businesses and professionals).
Use the ITR form that truly represents your income sources. The Income Tax Department has a handy online tool to guide you through form selection.
3. Collect Essential Documents
Gathering the right papers makes filing smoother and helps prevent errors.
Common documents you’ll need:
- Form 16: Issued by your employer. It shows salary and TDS details.
- Form 26AS: A consolidated tax credit statement from the TRACES portal to verify taxes deposited.
- Interest Certificates: From banks or post offices for FD and savings interest.
- Investment proofs: Under sections 80C, 80D, etc., such as life insurance, mutual funds, or medical insurance premiums.
- Capital gains statements: For income from shares or real estate sales.
Double-check this information before filing to avoid discrepancies.
4. Take Advantage of Tax Deductions
Using the right deductions can reduce your taxable income significantly.
Popular tax-saving avenues:
- Section 80C: Invest up to ₹1.5 lakh in PPF, ELSS, LIC, etc.
- Section 80D: Deduction on health insurance premiums.
- Section 24(b): Interest deduction on housing loans up to ₹2 lakh.
Every rupee saved in tax is money earned. So be proactive in learning what you’re eligible for.
5. Verify Form 26AS & AIS Statements
Before clicking ‘submit,’ reconcile your details with Form 26AS and the Annual Information Statement (AIS). These show the taxes deposited on your behalf.
Mismatch between your filing and what the tax department sees can trigger scrutiny or delays. Download these from the Income Tax e-filing portal and ensure your TDS, advance tax, and other credits are accurately reflected.
6. File Before the Deadline to Avoid Penalties
The standard income tax return filing deadline for individuals (without audit requirement) is July 31 following the end of the financial year.
Missing the deadline can lead to:
- Late filing fees under Section 234F (up to ₹5,000)
- Loss of certain deductions
- Interest on pending tax dues
Mark your calendar. Better yet, file early to avoid last-minute stress.
7. E-verify Your Return
Filing your return is not the final step—you must also verify it. Returns that aren’t verified get treated as non-filed.
You can e-verify using:
- Aadhaar OTP
- Net banking
- Digital signature
- Demat account verification
Alternatively, you can submit a physical ITR-V form to CPC Bengaluru. But e-verification is quick, easy, and mostly instant.
Common Pitfalls to Avoid
New taxpayers often make simple mistakes. Here are a few to watch out for:
- Wrong assessment year: Filing for the wrong financial year can void your return.
- Not reporting interest income: Even if small, bank interest is taxable.
- Skipping income from previous employers: Job switchers often miss this.
Consider consulting with a tax expert or using trusted online filing tools to reduce the chance of error.
Ready to File? Start Strong in Your Financial Journey
First-time tax filing doesn’t have to be nerve-wracking. With a little preparation, the right tools, and a clear understanding of your obligations, you can be tax-smart from the get-go.
Taxes are not just a compliance exercise; they are a key aspect of your broader personal finance journey—impacting your savings, investments, and creditworthiness.
Explore more of our Personal Finance guides to learn how to budget better, save on taxes, and build long-term wealth. Make your money work as hard as you do!