Filing your income tax return is a crucial part of declaring income to the government and presenting yourself as a responsible citizen. Self assessment is a system that the income tax department uses to gather information for calculating an individual’s tax obligations. As a taxpayer, it helps you know what is the meaning of GST and how much tax you owe to the government. Planning the tax filing in advance helps avoid errors and discrepancies due to negligence and claim the applicable tax exemptions, too.
The following sections give some top tips to help complete the tax return and pay self assessment tax.
Gather All Income Sources
Your income consists of all your earnings, deductions, investments, and expenses. Hence, disclosing all of them is essential, irrespective of whether they are tax-exempted or taxable. Moreover, in some cases, reporting all your assets and income is essential, even if it does not exceed the taxable limit. Therefore, recording all income and transactions and gathering all relevant documents simplifies the self-assessment process.
Remember the Last Date of ITR Filing
Whether you are a salaried or a self-employed income earner, you must file your annual ITR before 31st July. For instance, for FY 2023-24, you must file your ITR by 31st July 2024. The government may extend the date in some cases, as it extended it to 31st December for the pandemic year. Missing the deadline and late filing the ITR attract a late fee of up to Rs. 10,000 and takes away several tax benefits.
Calculate Total Taxable Income after Deductions
Total taxable income is the gross income you earn from salary and other sources minus any tax-saving deductions. These include various investments made during a financial year, such as insurance, house rent allowance, home loan EMIs, etc. After calculating the taxable income, apply the relevant tax rate for your regime and income bracket. Based on these calculations, you can estimate your tax liabilities and pay self assessment tax.
Claim Deductions
Several tax deductions are available under different sections. For instance, section 80C enables deductions for investments in insurance, PPF, NSC, home loan principal repayment, Senior Citizens Saving Scheme, Post Office Time Deposit Scheme, etc., while section 80D provides deductions for medical insurance. You can claim a tax deduction of up to Rs. 1.5 Lakh on life insurance under Section 80C and up to Rs. 75,000 on health insurance premiums under Section 80D. Section 80G also provides tax benefits on donations to specific institutions. Use these deductions strategically to maximise your tax savings.
Collect Form-16 from the Employer
Don’t forget to collect Form-16 from your employer. It provides an account of the salary you earned from the company during the financial year. It also records the TDS on your income deposited with the tax authorities. If you have switched to a new employer during the year, collect the form from your previous employer and provide it to the new employer. Based on this document, the new company will evaluate your tax liability.
Verify Form 26AS for Tax Deposits
While Form 16 shows your TDS deduction, Form 26AS shows the total amount of tax deposited to the government. Verify and ensure that the deposited tax amount accurately aligns with your tax liability. It will help determine if you can claim a tax refund or need to deposit more tax to the government.
Gather Supporting Documents for Self-Assessment Tax Filing
Apart from Form 16, you must gather all other supporting documents necessary for self-assessment tax filing. These include your PAN details, bank account statements, and interest certificates. Moreover, provide supporting documentation for any capital gains, such as from mutual funds or home sales. Similarly, collect Form 16A from your bank if it deducted tax from earned interest on your fixed deposits.
File the Returns on Time
Always keep the last date for filing returns in mind and file your ITR through the e-filing website on time. If you paid more tax, claim a refund by filing your return with bank account details. With this process, the income tax department can refund your credit amount through direct bank transfer. After filing the ITR, you can verify the returns electronically within 120 days. The income tax department will send a confirmation email to verify your refund.
Thanks to the convenience of e-filing, you can file your ITR and pay self assessment tax online from the comfort of your home. With these tips to file a self assessment tax return, go ahead and file your ITR without any confusion or intimidation.
