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Are You a First Time Tax Payer? Here’s Everything You Need to Know

Nov 28, 2017 | 3 years ago | Read Time: 3 minutes | By iKnowledge Team

Filing income tax returns is every individual’s rite of passage into adulthood. It is an intimidating experience, to say the least, and the number of government rules and guidelines don’t help either. If you are a first time tax payer, we’ve got you covered. Read on to discover all there is about filing income tax returns:

Why to file returns and when?

Filing Income tax returns is every responsible citizen’s duty. Apart from fulfilling your civic responsibility, filing IT returns is essential if you want to avail loans, or apply for a Visa, for instance. A clean tax history goes a long way in building trust with banks and other official institutions. And of course, there is also the circumstance of heavy penalties from the IT department in case of non-payments.

A financial year covers the period from April 1 to March 31 of the next year. You can either file your returns online or physically by July 31. Persons earning ₹5 lacs and above are required to file their returns online, as well as individuals owning assets outside India and whose income require auditing. The e-filing process is simple and can be done by the registering on the IT department’s website: Income Tax India

Income tax slabs and corresponding tax rates

Before we jump onto the tax rates, let us first discuss the different sources of income that affect an individual’s taxability. Each source adds to the process of income tax filing. The sources of income are categorized as following:

  • Income from salary
  • Income from house property
  • Income from capital gains
  • Income from business and profession
  • Income from other sources

You can learn about the difference in tax rates under the two tax regimes in the table below.

Income Slab (in Rs.) Tax rates under the old regime Tax rates under the new regime
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 5% Nil
Rs. 5,00,001 to Rs. 7,50,000 20% 10%
Rs. 7,50,001 to Rs. 10,00,000 20% 15%
Rs. 10,00,001 to Rs. 12,50,000 30% 20%
Rs. 12,50,001 to Rs. 15,00,000 30% 25%
Rs. 15,00,000 and above 30% 30%

According to the new tax regime, taxpayers can now choose between either of the two tax regimes based on their income and investments. Taxpayers who opt for the new regime get to enjoy significantly lower tax rates. Click here to know more

Documents required

To file your IT returns, you must have these necessary documents ready:

  • Proof of Identity
  • Proof of Address
  • Bank account details
  • Permanent Account Number (PAN) card, attached with your Aadhar number
  • For salaried individuals, Form 16 (this form is your TDS certificate which acts as a proof of exactly how much tax is to be deducted from your income.)
  • Proof of investments (to avail tax deduction under any scheme like 80C)
  • Home loan interest certificate and owner’s details (to claim deductions under Home Loan repayment scheme)

It is important to note that capital gains have different rates, depending on their term duration. If you have made profits from your investments in Mutual Funds, Gold, FDs, or equities, you must file it in your tax declaration. To file correct tax files, find out the rates on long-term and short-term capital gains.

If you have multiple sources of income, it is advisable to take the help of a Chartered Accountant (CA). Maintain all details and documents as required and have a hassle-free tax filing experience.

Want to know your taxes? Access our easy to use tax calculator, and plan your finances.

Need more information? Here’s something you might like to read on Income Tax:

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