Income Tax for Beginners

Income Tax for Beginners

You directly pay income tax to the Indian government based on your earnings or profits. Direct taxation and indirect taxation are the two forms of taxes. Your earnings are subject to direct taxation, which you pay to the government. The government receives indirect taxes that have been acquired through intermediaries. For instance, you are taxed when you purchase things or use services from theatres, restaurants, or e-commerce websites. The government then receives these taxes from these service providers.

Benefits of Income Tax

Loans

To approve a loan, the majority of banks need documentation of income tax returns for at least three consecutive years. Therefore, it can be beneficial for you if you can present your IT returns if you plan to make an investment in the future.

Declaring TDS Refunds

Whether or not the individual is required to pay income tax, the investment income from fixed deposits that they have made as a person is subject to TDS at the rate of 10%. If your pay is less than the chargeable limit, you can get a payment of TDS reduced by filing an income tax return.

Carry Forward of Losses

If someone has a pattern of losses, they can carry those losses forward for the following eight years by filing an income tax return in order to trigger the pattern again with the anticipated returns. It aids in easing the burden of taxation in subsequent years.

Processing of VISA

At the time of the visa interview, international offices will request ITR declarations if you are moving overseas. While some offices might require the most recent document, others might ask for ITR acquisitions from the last three years.

Obtaining High Life Insurance

If you decide to purchase a term policy with a total cover of ₹50 lakh or more, the life insurance companies will need ITR receipts. Your early tax returns must be provided if you wish to start a business and submit an application for a government contract.

Self-Employed

Salaried individuals receive Form 16 as proof of their income, however merchants, government officials, and employees of companies do not receive Form 16. So, if their yearly income exceeds the principal exemption goal of Rs 2.50 lakh, ITR receipts boost an even more amazing document for them. ITR receipts will be the only documentation of self-employment earnings and tax payments for all types of company activity.

Evade Paying Taxes and Interest

If you don't file an ITR, the past-due return may start accruing additional interest each month for the remaining tax that you have already paid.

Documents Required For Income Tax Filing

Here are a few documents required in general for filing income tax returns:

• PAN number
• Aadhaar number
• All the bank account details of the assessee;
• TDS certificates (Form 16, Form 16A, Form 26AS, etc.);
• Tax Payment Challans
• Investment Proofs (Investments and deductions that can be claimed under section 80C, 80D, 80E, 80TTA, etc.)

The specific documents required are:

Form-16

Form-16 is divided into two parts, Part-A and Part-B. All the tax-related elements that your business or firm deducted throughout the year are included in Part-A. It also contains information on your (PAN) Permanent Account Number and the TAN of your company, in addition to facts about the taxes that were deducted from your paycheck. In contrast, the form's Part-B contains information about your whole payroll breakdown, including exempt wages, benefits, etc.

Salary slips

In addition to benefits and profit in place of pay, salaried taxpayers anticipate providing information concerning taxable interests like housing rent assistance, transportation assistance, etc.

Interest-Related Bank and Post Office Papers

It is possible to receive interest on savings bank accounts, fixed deposits, post office savings accounts, and ongoing deposits. As a result, if no TDS has been deducted, one must either accept the interest certificates from the bank's post office department to identify the whole amount of interest received.

Form-16A/Form-16B/Form-16C

If Tax Deducted at Source is applied to funds other than salaries, such as interest on fixed deposits, recurring securities, etc., over the specified uses in accordance with the applicable tax laws, your bank will provide Form 16A to you, which will detail the amount of TDS applied.

Form 26AS

Your comprehensive annual tax report is on Form 26AS. It contains:

TDS decreased by the head in addition to banks

TDS deducted by any other organisation for the money that is given to you Advance taxes that you personally collected throughout the financial year.

Tax-saving investment records

Your comprehensive annual tax report is on Form 26AS. It contains:
TDS decreased by the head in addition to banks
TDS deducted by any other organisation for the money that is given to you Advance taxes that you personally collected throughout the financial year.

Why Vakilsearch

At Vakilsearch, we have a large network of the best legal minds who can assist you with all the legal procedures. We manage all the documentation so that your dealings with the government run as smoothly as possible. In order for you to set reasonable expectations, we will also provide you with a comprehensive explanation of the procedure.

Enjoy future tax filing without any hassles! Know more about income tax filing for beginners with us!

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