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Filing Your Income Tax in 2024? Here’s Everything You Need To Know

07 May 20246 mins read by Angel One
Filing your ITR in 2024? This guide provides essential information for filing income tax returns in India, covering everything from basic terms to choosing the right ITR form and understanding tax deductions.
Filing Your Income Tax in 2024? Here’s Everything You Need To Know
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As the tax filing season approaches, many individuals grapple with the complexities of income tax. Whether you’re a first-time taxpayer or a seasoned filer, understanding the basics of income tax is essential for compliance and financial planning. In this comprehensive guide, we’ll delve into the intricacies of income tax, covering everything from key terms to filing requirements and tax-saving strategies.

Understanding the ‘Previous Year’

The previous year, or the financial year or tax year, spans 12 months from April 1 to March 31 of the following year. Regardless of when you commence your job, your tax obligations conclude on March 31, with a new tax year commencing on April 1. Hence, you must plan your taxes for each financial year accordingly.

Assessment Year

A term commonly associated with tax filing, the assessment year follows the previous year and is when you ‘assess’ and file your return for the preceding year. For example, the assessment year 2019-20 corresponds to the previous year, 2018-19. If you begin employment on January 1, 2023, your tax year ends on March 31, 2023. Subsequently, 2022-23 becomes your previous year, and your assessment year is 2023-24.

Which Income You Should Pay Tax For?

Sources of Income Particulars
Income from Employment This includes all the money you receive as part of your job, including salary, allowances, and any leave encashment.
Rental Income Income generated from owning and renting out a house or building, whether it’s self-occupied or rented to others.
Capital Gains Income derived from the sale of a capital asset, resulting in either a gain or loss.
Business Income Income or loss incurred from running a business or carrying out a profession or trade.
Other Income This encompasses various sources such as interest earned from savings bank accounts, income from fixed deposits, family pension, or gifts received.

What Is ITR and Who Should File ITR?

An Income Tax Return (ITR) is a form for taxpayers to report their income and tax liabilities to the tax authorities. India has 7 ITR forms, each with specific criteria. Taxpayers must file their ITR by the due date.

Mandatory filing conditions:

  1. Gross income exceeds the basic exemption limit.
  2. Deposits over ₹1 crore in ‘current’ bank accounts or ₹50 lakh in ‘savings’.
  3. Foreign travel expenses over ₹2 lakh.
  4. Electricity expenditure surpasses ₹1 lakh.
  5. TDS/TCS deductions exceed ₹25,000 (₹50,000 for seniors).
  6. Business turnover exceeds ₹60 lakh.
  7. Professional income surpasses ₹10 lakh.

Which Type of ITR Should You File?

Form Applicable To Income Sources / Conditions
ITR-1 Resident individuals with income ≤ ₹50 lakhs – Salary/Pension

– One House Property- Other Sources

ITR-2 Individuals with income > ₹50 lakhs and other cases – Every income from ITR > ₹50 lakhs

– Capital gains

– More than one house property

– Foreign income/assets

– Crypto income (if reported as capital gains)

– Directorship in a company- Holding unlisted equity shares

ITR-3 Individuals with business or professional income – Every income from ITR-2

– Business/Professional Income

– Crypto income (if reported as Business Income)- Partner in a firm

ITR-4 Resident Individuals and HUFs with income ≤ ₹50 lakhs – Every income from ITR-1

– Presumptive income

ITR-5 Firms, LLPs, AOPs, BOIs – Applicable to businesses and organisations other than companies
ITR-6 Companies not claiming exemption under section 11 – Required for companies not claiming certain tax exemptions
ITR-7 Certain persons/companies – Under Sections 139(4A), 139(4B), 139(4C), 139(4D)

Deductions In Income Tax

Deductions are specific amounts the Income Tax Department allows you to subtract from your Gross Income. This reduction helps in lowering your overall tax liability.

Income Calculation:

  1. Gross Income: Sum of all income heads.
  2. Taxable Income: Gross Income minus applicable deductions.

Maximising your allowable deductions can significantly reduce the amount of tax you owe. Deductions are primarily covered under Section 80 of the Income Tax Act, which includes sections from 80C to 80U.

In 2020, the Indian government introduced two tax regimes: the old and the new. Each regime has different tax rates and allowable deductions:

  • Old Tax Regime: Allows all deductions under Sections 80C to 80U, with specific conditions.
  • New Tax Regime: Limited deductions, including those for let-out property under Section 24B and employer contributions to NPS (National Pension System).

Deductions Which Can Be Availed

Section Eligible Investments and Payments Maximum Deduction
80C Investments in Equity Linked Saving Schemes (ELSS), Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), and payments towards life insurance premiums and principal repayment of home loans. ₹1,50,000
80CCC Contributions to pension funds. ₹1,50,000
80CCD(1) Contributions towards Atal Pension Yojana and other notified pension schemes. Employed: 10% of basic salary plus Dearness Allowance (DA)
Self-employed: 20% of gross total income
80CCE Total deduction for the sums invested or paid under Sections 80C, 80CCC, and 80CCD(1). ₹1,50,000
80CCD(1B) Additional investments in the National Pension Scheme (NPS), over and above the limit in Section 80CCE. ₹50,000
80CCD(2) Employer’s contribution to NPS is over the limit set under Section 80CCE. Central government employees: 14% of basic salary + DA
Other employees: 10% of basic salary + DA

Tax Deducted at Source (TDS)

TDS is a method where tax is automatically deducted by the payer at the time of making payment, such as by employers or banks. For instance, an employer deducts tax from an employee’s salary based on applicable tax slabs if the taxable income exceeds ₹2,50,000. Banks deduct TDS on interest from fixed deposits, usually at 10% or 20% if PAN is not provided.

The final tax payable is calculated by applying the appropriate tax slabs to your taxable income. Any TDS already deducted can be subtracted from this tax payable.

Standard Deduction

Introduced in Budget 2018 for salaried employees, replacing medical reimbursement and transport allowance. Initially set at ₹40,000, it was increased to ₹50,000 from FY 2019-20 and remains applicable in both tax regimes from FY 2023-24.

Documents Required for Filing Income Tax Returns (ITR)

When preparing to file your Income Tax Returns, various documents are needed depending on your source of income:

  • Salaried Individuals: Form 16/16A, Form 26AS, rent receipts for HRA claims, payslips, and records of investments under Sections 80C, 80E, 80D, and 80G.
  • Capital Gains: Statements for ELSS, mutual funds, records of buying and selling of equity/debt funds, real estate transactions including the purchase and selling price, registration details, and statements of capital gains from shares and stock trading.
  • Income from House Property: PAN card, co-owner details, property address, and home loan interest certificates.
  • Other Sources: Details of fixed deposits and interest from tax-saving or corporate bonds.

Income Tax Slabs and Rates

Tax rates are determined by the income slab under which an individual’s income falls. Below is a table illustrating the tax slabs and applicable rates under both the old and new tax regimes:

Income Slab (₹) Old Tax Regime New Tax Regime (until March 31, 2023) New Tax Regime (from April 1, 2023)
0 – 2,50,000
2,50,000 – 3,00,000 5% 5%
3,00,000 – 5,00,000 5% 5% 5%
5,00,000 – 6,00,000 20% 10% 5%
6,00,000 – 7,50,000 20% 10% 10%
7,50,000 – 9,00,000 20% 15% 10%
9,00,000 – 10,00,000 20% 15% 15%
10,00,000 – 12,00,000 30% 20% 15%
12,00,000 – 12,50,000 30% 20% 20%
12,50,000 – 15,00,000 30% 25% 20%
>15,00,000 30% 30% 30%

Points To Remember While Filing ITR in 2024

Filing your first income tax return in India can feel complex. Here’s a simplified guide to help you through the process:

  1. Why File Taxes? – Filing income tax returns helps fund national development, supports claims for tax refunds, and proves your financial history for future loans or visas.
  2. Is It Mandatory? – Yes, if your income or situation meets the criteria listed on the Government’s official website.
  3. Who Should File? – Besides those required by law, filing returns prove your income legitimacy if you plan to apply for loans or international jobs.
  4. How to File Online?

    • Visit the official Government IT website.
    • Fill out the necessary forms.
    • Check for any tax refunds.
    • Submit online with a Digital Signature Certificate or send a printed ITR-V Form to the IT Department’s Processing Centre within 120 days.
  5. Alternative Method:

    • Download forms from the website.
    • Fill them offline.
    • Post them to the IT department.
  6. What You Need- Gather bank statements, investment proofs, TDS certificates, home loan statements, and salary slips. The exact documents depend on your income sources and deductions.
  7. Income Tax Refund- This is calculated and processed when you file your return. No separate application is needed.
  8. Consequences of Not Filing- Not filing can lead to legal consequences and fines if you owe taxes.

Before you start, check the official website for the latest requirements and ensure you understand your tax obligations. This will help avoid any issues during filing.

Final Words

Filing taxes is essential for every responsible citizen in India. Services like Quicko and ClearTax are designed to streamline this process, making it efficient and user-friendly. You can access both services on your Angel One app.

Stay updated with the latest financial insights by following the Angel One blog or joining our community page if you are interested in investing. Consider opening a Demat account with Angel One to start trading stocks, commodities, and currencies.

Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations.

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