As the financial year 2023-24 draws to a close, taxpayers are gearing up to file their income tax returns.
To navigate this process seamlessly, it’s crucial to grasp some key aspects beforehand. Here’s a breakdown of essential things every taxpayer should understand:
1. Choosing the Right Form
Taxpayers must select the appropriate income tax return form based on their residential status and income sources.
Currently, the Income Tax Department offers ITR-1, ITR-2, and ITR-4 for online filing. For instance, individuals with salary income can utilize ITR-1, while businessmen and professionals may require ITR-2 or ITR-4.
2. Importance of Form-16
Form-16, issued by employers to employees by May 15, is essential for salaried individuals filing income tax returns.
This document provides crucial information about the employee’s income and tax deductions (TDS) made by the employer.
3. Understanding ITR-2 and ITR-4
ITR-2 is suitable for businessmen and professionals opting for presumptive taxation with an annual income below Rs 50 lakh.
On the other hand, ITR-4 is designed for resident individuals and HUFs with a total income up to Rs 50 lakh, including income from business and profession.
4. Comprehensive Income Calculation
Before filing returns, taxpayers should meticulously calculate their entire income, including salary, rent, capital gains, interest, and dividends. This ensures accurate reporting and minimizes errors.
5. Choosing Between Old and New Regime
Taxpayers must carefully consider whether to opt for the old or new tax regime. While the old regime offers various deductions and exemptions, the new regime simplifies the tax structure but may result in higher tax liability.
6. E-Verification Process
After filing returns, e-verification is mandatory for validation. Failure to verify electronically requires taxpayers to submit signed income tax forms to the Income Tax Office, Bengaluru, within 30 days of uploading the return.
By understanding these crucial aspects, taxpayers can navigate the income tax filing process effectively and ensure compliance with regulations.
