Thursday, November 30, 2023

How to File Your Income Tax Return (ITR): A Step-by-Step Guide for Students

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Author: – Founder of Host Books (A Financial Service Provider)

A responsibility to manage your money that spans age and profession is filing your income tax return (ITR). Every person, including students, must file an income tax return with the government each year in order to report their annual income, outgoings, and tax liabilities.

It acts as an essential financial record, demonstrating one’s financial responsibility and adherence to tax regulations. For students to develop appropriate financial habits and to be prepared for adult financial responsibilities, an understanding of ITR’s complexities is essential. Additionally, having a solid understanding of tax filing helps students to make wise financial decisions, building a solid foundation for their long-term financial security.

Here’s a look at the guide that will help students to start their financial path with confidence and competence-

Gather Necessary Paperwork: The first step is to gather all the paperwork you’ll need to complete your ITR, including Form 16 and other supporting documents like interest certificates and payslips. The information in the documents will help you determine your gross taxable income and give you specifics on the tax deducted at source (TDS) from your earnings.

Check Form 26AS and/or AIS After Downloading: The Annual Information Statement (AIS), which was introduced by the income tax division, informs taxpayers of the many financial activities they carried out throughout the financial year. There is a chance that the AIS has inaccuracies, though, given it has only recently been launched. According to the tax authorities, Form 26AS can be used to file ITR if there are any problems in the AIS. Form 26AS, which contains all the information about the taxes that have been deducted from your income and deposited against your PAN, functions like a tax passbook.

Correct any Errors on Form 26AS, if any: You must bring up the issue with your deductor if the amounts shown in the TDS certificates (Form-16, Form-16A, etc.) and Form 26AS differ from one another in order to get the inaccuracies corrected. The deductor could be your company, bank, or someone else, and you should ask him to rectify the data. You won’t be able to get a credit for the tax that was deducted if the error is not fixed.

Calculate the Overall Taxable Income for the Financial year: You must determine the total income subject to tax after gathering all the necessary paperwork and verifying all the taxes withheld from your pay. Total income is determined by combining the earnings from five separate heads, taking all the appropriate deductions permitted by the Income-Tax Act, and offsetting any losses that may have occurred.

Calculate Your Tax Liability: An individual taxpayer has the choice to either stick with the current tax system or choose the new one this year. You must determine your tax liability by applying the tax rates based on your income slab after calculating your total income. This will be determined by the tax structure that the individual has chosen.

Determine the Final Tax Due, if any: After calculating your tax liability in the previous step, remove the taxes you already paid through TDS, TCS, and advance tax during the year. Incorporate interest, if any, due under sections 234A, 234B, and 234C.

File a Tax Return Once All Taxes Are Paid: You can begin the ITR filing process after you have paid any taxes that may still be due. Only if you file your ITR, will you be able to request a refund from the tax division. As a result, even if you are not legally compelled to file your ITR, you still must do so. Make sure you are submitting your ITR using the appropriate ITR form. Your ITR will be considered defective, and you will need to file it again if you file it on the wrong form.

Verification of ITR: Verification is the last step before filing an ITR. You can check your ITR in six different ways. Of them, five involve electronic techniques and one involves physical verification. No paperwork must be sent to the tax division if you want to electronically verify your tax return.

All Things Considered!

Income tax return (ITR) management and understanding are a universal financial responsibility. With the aforementioned steps, students can confidently start their financial path. It highlights the value of ITR and provides students with the necessary information to complete their tax returns correctly. By learning these techniques, one not only develops financial discipline but also lays the groundwork for long-term financial security.

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