Have you started earning as a salaried or self-employed professional? If yes, you must start filing your taxes. After understanding the basics of filing taxes, there might be no need to hire an accountant. Also, one cannot ignore income tax returns, as they are mandatory. You must file Income Tax Return (ITR) even when you aren’t in the taxable income category. Let us discuss the process of filing taxes in India in detail.
What Exactly is Tax Information Network?
Tax Information Network is an initiative by the tax department of our country to modernise and digitise the tax filing process. Before the launch of TIN, the tax department faced many challenges collecting taxes from individuals. For the same rationale, it came up with TIN in 2004 to collect taxes easily. With the help of an electronic portal provided by TIN, one can submit their tax details online. TIN also consists of systems to process and analyse the tax information submitted by citizens. TIN is beneficial for both citizens and the tax department. Tax Information Network offers a wide range of services to citizens, like:
- Online Tax Accounting System (OLTAS)
- Equalisation Levy
- TDS on Sale of Property
- Tax Deduction and Collection Account Number (TAN)
- Permanent Account Number (PAN)
- Electronic Tax Credit System (ETCS)
- Electronic Filing of Returns
Basics to Understand for Filing Your Taxes
Are you filing income tax for the first time in India? If yes, you must understand the basic terms used on online portals. Here are some terms you must know to file your taxes:
- Previous Year: It is the duration for which you will be filing taxes. You will always file taxes for the income generated between 1st April and 31st March of the preceding year.
- Assessment Year: It is the year in which you are filing taxes for the previous year. For example, you will file taxes for the 2022-2023 session after 31st March 2023. In such a case, 2023-2024 will be the assessment year.
- Income Sources: You must show all your income sources while filing tax returns. It includes income from salary, rental property, capital gains (short and long-term), business, and other sources. Let us say you made capital gains via equity and commodity trading. You must show the capital gains in your tax document as a source of income.
- Tax Deductions: The tax department allows you to bring your taxable income down. There are numerous deductions mentioned in the Income Tax Act (ITA). You can claim tax deductions for interest paid on home loans. Similarly, individuals investing in Equity Linked Savings Scheme (ELSS) can claim deductions.
- TDS: Tax Deducted at Source (TDS) is a method of applying taxes beforehand. The person or employer making the payment deducts taxes in advance, based on the rules.
Step-by-Step Process of File Taxes in India
Thanks to the tax information network, you can now file taxes online. Here is the step-by-step process to file taxes online in India:
- Keep all your documents handy. It includes bank account statements, investment documents, Form 16, etc.
- Register on the Income Tax Portal when filing taxes for the first time. Once you become a registered user, you won’t have to do it again.
- There are different income tax forms on the online portal for salaried and self-employed individuals. Choose your income tax form based on your income sources.
- Provide complete and accurate details in the ITR form.
- Calculate your tax liability. The online portal will have calculators to help individuals calculate their tax liabilities.
- Claim your tax deductions on the online portal with supporting documents.
- Review and submit your form. You can also generate an XML file containing all tax details.
In a Nutshell
You don’t always need an accountant to file taxes in India. With the help of TIN, DIY solutions are available for taxpayers. You can visit the online portal and file taxes in quick succession. Start filing your taxes and become a responsible citizen!