Simplify ITR Filing By Segregating Your Income

 

In ULIP policy, the investment risks in the investment portfolio is borne by the policyholder.

Every year, people scramble to file their Income Tax Return (ITR) form on time. Many people today rely on their accountant or other family members to complete the paperwork for them. Those who attempt to file their taxes by themselves may face a few difficulties. Understanding the intricacies of Income Tax provisions can seem extremely daunting. Luckily, we’re here to help. Here’s a look at how you can simplify the ITR filing process.

What Is Income Tax Return?

The ITR is a form that individuals must submit to the Income Tax Department every year. The form contains details regarding the individual’s earnings for a given financial year. The form also has details regarding how much tax the individual needs to pay based on the income earned. Taxpayers can also make investments to minimise their income tax liability. Certain financial tools, such as life insurance premiums, are eligible for tax exemptions and deductions. If you have a term plan or a Unit-Linked Insurance plan, you can deduct a maximum of INR 1,50,000 per year from your taxable income. Health insurance premiums are tax-deductible as well, allowing you to save on your taxable income.¹ You must understand that your income is not limited to your individual salary. Income also includes profits or gains from a business, income you earn on your property and capital gains as well as interest, dividends etc on your investments.

How to File an Income Tax Return?

Today, it is very convenient for people to complete the ITR filing process online. So, individuals who are liable to pay tax every year can follow these steps to file their ITR:

1. To start, you must visit the Income Tax e-filing portal at www.incometax.gov.in. Sign in to the portal using your PAN or Aadhaar.

2. Once you arrive at the Dashboard, you need to select the e-File­ option. Click on Income Tax Returns in the drop-down menu. Then select File Income Tax Return.

3. Next, you have to select the financial year and download the utility software to complete the ITR filing process. Earlier, individuals could use Microsoft Excel or Java. From 2020-2021, they must use the JSON utility.

4. Once you select the assessment year, you must pick whether you are completing the ITR filing process online or offline.

5. If you have already completed a part of the ITR form, select the Resume Filing option. If you would like to start over, select the Start New Filing option.

6. After picking between an individual, HUF and others, you must select the relevant ITR form. If you do not know which form to fill, you must answer some questions regarding your income and deductions and the portal will select the relevant ITR form.

7. Make a list of the documents you require and then click the Let’s Get Started button.

8. Mark all the checkboxes that apply to you. Next, you must verify that the auto-filled information about you and your income is correct. You have to click Confirm at the end of each section.

9. Complete the form by adding information about your income and then click Proceed.

10. If you have a tax liability, you must pay the amount. In case you do not have to pay additional tax or you are owed a refund, you can view the amount. Once you pay the tax, you can Preview and Submit Your Returns.

How to Segregate Your Income for Easier ITR Filing

To make your income tax return filing easier, you can segregate your income into the following categories:

Income from Salary

Any income you earn as fees, wages, advances, pensions, retirement benefits and gratuity are all considered your income from salary.

Income from House Property

The income you earn as rent from a house or income you earn from land that you own is considered income from house property.

Income from Profit in Business or profession

As an entrepreneur, the profits and gains you earn are known as income from profit in business or profession.

Income from Investments and Capital Assets

Many earning individuals also opt to make certain investments. The income they earn from their investments or other capital assets falls under this category.

Income from Other Sources

Income you earn from any other source, such as a cryptocurrency investment, interest, dividend or gambling, falls under this category.

Frequently Asked Questions About Filing ITR

Q: How many ITR forms are there under the Income Tax Law?

A: Currently, there are eight ITR Forms. Each form is applicable to a different type of person based on how and where they earn their income.

Q: Do I need to submit any documents along with the ITR?

A: No, you do not need to attach any proof of investment or other documents with your ITR form.

Q: Is there an e-filing helpdesk that can provide assistance to taxpayers?

A: Yes, individuals who require help can call 1 800 180 1961.

Q: Is there any benefit to filing ITR?

A: When you file your ITR on time, you are consciously contributing towards building the nation. Additionally, when you pay your dues and file your ITR on time, you increase your credit score and creditworthiness. Furthermore, it acts as important document while applying for loan, banks generally ask for ITR of last three years. Today, you can opt to e-file your ITR quickly and conveniently from anywhere.

Related Articles:

• How to File Income Tax Return
• Best Tax Saving Investment Options in 2022 (FY 2022-2023)

ARN:  ED/09/22/29033