ITR filing for Freshers - A Complete guide
- ITR filing by CA expert
- ITR filed within 2 hours
- ITR filing for last 3 years
In this comprehensive guide, we will explain some basic terms related to income tax, income tax slabs, douments required, first time registration on portal process, ITR filing process,etc for those freshers or those filing ITR for first time in simple language.
What is Income tax?
Income tax is a direct tax levied by the government on the income earned by individuals, companies, and other entities within the country. It’s calculated based on the total taxable income after accounting for various exemptions, deductions, TDS and advance tax. India follows a progressive tax system, where tax rates increase with income levels. Individuals are required to file their tax returns annually, reporting their income and paying taxes accordingly. Income tax revenue serves as a significant source of government funding for public services and welfare programs. Non-compliance with income tax laws can result in penalties and notices.
What is ITR filing?
In simple terms, it’s the process of reporting your income and taxes to the government. Whether you’re earning through a job, freelance work, or any other source, if your income exceeds the exempt limit which will be discussed later, you’re required to file your ITR.
What is Previous year?
The “Previous year” refers to the 12-month period from April 1st to March 31st of the following year, regardless of when you start your job. Planning taxes for each financial year is crucial as the tax year closes on March 31st, and a new one starts on April 1st. Previous year is same as the financial year.
What is Assessment year?
The “Assessment Year” follows the “Previous year” and is the financial year in which you assess and file your return for the previous year. For example, the assessment year 2019-20 corresponds to the previous year 2018-19. So, if you start a job on October 1st, 2023, your previous year is 2023-24, and your Assessment Year is 2024-25.
What is the last date to file ITR?
The due date of ITR filing for freshers is 31st July after the financial year ends. The last date to file revised ITR if correction is required due to mistake made is 31st December. Also the last date to file belated ITR is 31st December.
Income Sources
Income under income tax laws is categorized into five heads:
Income from Salary: Earned through employment, including basic salary and allowances. Form 16 or salary slips provided by employers helps determine taxable salary income, with certain allowances being deductible.
Income from House Property: Comprises rental income from properties. Sale proceeds of houses are not considered here, only rental income. A standard deduction of 30% is applicable to rental income.
Income from Business or Profession: Applicable if you run a business or practice a profession. Business expenses can be claimed as deductions from revenue.
Capital Gains: Income generated from the sale of capital assets such as property, gold, equity shares, bonds, and mutual funds. Personal movable assets like furniture or cars are excluded.
Income from Other Sources: Includes income not covered in the above heads, like interest from bank deposits, dividends from companies, and commissions or tuition fees.
Totaling these incomes gives the Gross Total Income (GTI) for income tax purposes.
Deductions
To encourage investments and financial planning, the government offers various deductions. These are listed in Chapter VI A of the Income Tax Act.
1. 80C – This section contains, among other things
- Employee’s provident fund (deducted monthly from salary)
- Life insurance premium
- Public Provident Fund investment
- ELSS investment
- Tution fees for 2 children
- Home loan principal repayment, etc
2. 80D – Medical Insurance premium – If you have medical insurance for yourself or your parents, you can deduct the premium paid from your income under this section
3. 80E – If you have education loan, the amount you pay towards interest can be claimed as deduction under this section. Keep in mind, you cannot deduct the whole installment, just the interest portion. Your loan statement will give you the breakup or you can ask for interest certificate from bank.
4. 80G – If you have made a donation to any registered charitable trust or NGO, you can claim it as deduction here. Your donation certificate will specifically say if the donation is deductible for Income tax purpose.
Once you know your deductions, list them out and total them. Deduct this from your GTI. This gives you, what is called in Income Tax terms, your Total Income or taxable income.
Tax Deduction at Source (TDS)
Tax Deduction at Source (TDS) ensures income tax payment by deducting tax at the source. Employers, banks, and businesses deduct TDS from income payments and remit it to the government. Salaried employees have tax deducted by their employers, while banks deduct tax on interest exceeding Rs. 40,000 annually for FD. TDS is also deducted from commission and professional fees income. Form 26AS provides details of TDS deducted. It can be accessed through the TRACES website, e-filing portal, or via internet banking if PAN is linked. Checking Form 26AS helps ensure accurate tax filings and prevents tax discrepancies.
Advance tax
Advance tax is a system of staggered payment of income tax by taxpayers on their estimated income, rather than paying it all at the end of the financial year. It’s also known as “pay-as-you-earn” tax. Individuals, including salaried employees and self-employed professionals, as well as corporates, are required to pay advance tax if their total tax liability after TDS exceeds Rs. 10,000 in a financial year.
Advance tax payments are made in installments, typically scheduled at specific intervals throughout the financial year. The payment amounts are based on the taxpayer’s estimated income and tax liability for the year. Advance tax helps in the timely collection of taxes by the government.
Calculating Tax payable or refundable
Calculating tax payable involves applying tax rates to your taxable income based on predefined tax slabs (discussed later). This final tax payable figure can be reduced by the total tax deducted at source (TDS) and advance tax throughout the year resulting in either a balance tax payable or a refund due to the taxpayer. If there is any balance tax payable then you have to it (known as self assessment tax). If tax is refundable then it will credited to your bank account.
Income tax slab for freshers below 60 years (Old Regime)
| Income | Tax rates |
| Less than Rs.2,50,000 | 0% |
| Rs.2,50,000 – Rs.5,00,000 | 5% |
| Rs.5,00,001 – Rs.10,00,000 | 20% |
| More than Rs.10,00,000 | 30% |
Income tax slab for freshers below 60 years (New Regime)
| Income | Tax rates |
| Less than Rs.3,00,000 | 0% |
| Rs.3,00,001 – Rs.6,00,000 | 5% |
| Rs.6,00,001 – Rs.9,00,000 | 10% |
| Rs.900,001 – Rs.12,00,000 | 15% |
| Rs.12,00,001 – Rs.15,00,000 | 20% |
| More than Rs.15,00,000 | 30% |
Income tax slab for freshers between 60 & 80 years
| Income | Tax rates |
| Less than Rs.3,00,000 | 0% |
| Rs.3,00,001 – Rs.5,00,000 | 5% |
| Rs.5,00,001 – Rs.10,00,000 | 20% |
| More than Rs.10,00,000 | 30% |
Income tax slab for freshers above 80 years
| Income | Tax rates |
| Less than Rs.5,00,000 | 0% |
| Rs.5,00,001 – Rs.10,00,000 | 20% |
| More than Rs.10,00,000 | 30% |
Documents required for ITR filing for Freshers
For freshers filing their Income Tax Return (ITR) for the first time, here’s a checklist of documents typically required:
- PAN Card
- Aadhaar Card: Aadhaar number is linked with PAN and often required for verification.
- Form 16: For salaried employees, Form 16 issued by the employer provides details of salary, tax deductions, and TDS.
- Bank Statements: Statements showing interest earned on savings accounts, fixed deposits, etc.
- Investment Proofs: Documents related to investments such as ELSS, PPF, NSC, etc., for claiming deductions under various sections of the Income Tax Act.
- Rent Receipts: If living in a rented accommodation, rent receipts may be needed for claiming House Rent Allowance (HRA).
- Property Documents: Details of property owned, if any, including rental income, if applicable.
- Income from Other Sources: Any additional income from freelance work, interest on investments, etc.
- TDS Certificates: Certificates issued by deductors for taxes deducted at source.
- Form 26AS: Tax Credit Statement providing details of taxes paid and TDS deducted.
- Proof of Tax-saving Expenses: Receipts for expenses like medical insurance premiums, donations, etc., eligible for tax deductions.
- Personal Details: Details such as address, bank account number, etc., for accurate filing.
While this list covers the basics, the specific documents required may vary based on individual circumstances and sources of income. It’s advisable to consult a tax expert or refer to the official Income Tax Department website for comprehensive guidance.
Types of ITR form
Income Tax Return (ITR) forms are categorized based on the nature of income and the status of the taxpayer.
ITR-1 (Sahaj): For individuals having income from salaries, one house property, other sources like interest income, and total income up to Rs. 50 lakhs.
ITR-2: For individuals and Hindu Undivided Families (HUFs) not having income from profits and gains of business or profession. It includes income from salaries, multiple house properties, capital gains, and other sources.
ITR-3: For individuals and HUFs having income from salaries, multiple house properties, capital gains, income from profits and gains of business or profession and other sources. Partnership firm and company cannot use this form.
ITR-4 (Sugam): For presumptive income from business and profession. This is applicable for individuals, HUFs, and firms (other than LLP) with total income up to Rs. 50 lakhs.
ITR-5: For firms, LLPs (Limited Liability Partnerships), Association of Persons (AOPs), Body of Individuals (BOIs), artificial juridical persons, and other entities.
ITR-6: For companies other than companies claiming exemption under section 11 (Income from property held for charitable or religious purposes).
ITR-7: For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F).
It’s essential to choose the correct ITR form based on your income sources and status to ensure accurate filing
ITR filing process
Register on the e-filing portal by visiting the Income Tax Department website and clicking on ‘Register’. Provide your PAN details, personal information, email, and mobile number. Verify the OTP sent to your email and mobile.
Once registered, log in to the e-filing portal. Click on ‘e-file Income Tax Return’ and select the assessment year. Choose the appropriate ITR form based on your category and income sources.
Provide your bank account details and validate them if necessary. Fill in the details on the ITR form accurately.
Review the summary of your ITR and validate it. Then, proceed to verify your ITR using any of the available methods such as Aadhaar OTP or digital signature or send a copy of your ITR to the Income Tax Department within 30 days.
Download the ITR acknowledgement reciept.
Conclusion
ITR filing for freshers involves registering on the e-filing portal, gathering necessary documents like PAN, Aadhaar, Form 16, and bank statements. Choose the correct ITR form based on income sources. Log in to the portal, fill in accurate details, and validate information. Verify ITR using Aadhaar OTP or other methods. Ensure timely filing before the deadline, usually July 31st, to avoid penalties. By following these steps, freshers can file income tax return.
In case you have any query for filing ITR you can contact us at +91 9769647582
FAQ (Frequently asked Questions)
What is Income Tax Return (ITR)?
- ITR is a form used to declare your income and taxes paid to the government. It is filed annually by individuals and businesses to report their income to the Income Tax Department.
Do I need to file an Income Tax Return (ITR) as a fresher?
- If your income exceeds the basic exemption limit set by the government, you are required to file an ITR. For the assessment year 2024-25, the basic exemption limit for individuals below 60 years of age is ₹2.5 lakhs.
What documents do I need to file an ITR as a fresher?
- You will need documents such as your PAN, Aadhaar Card, Form 16 (if salary), bank statements, details of investments, and any other relevant financial documents.
Which ITR form should I use?
- As a fresher, if you have only income from salary or interest on savings, you can use ITR-1 (Sahaj). If you have income from other sources such as house property or capital gains, you might need to use a different form like ITR-2.
How to file ITR as a fresher?
- Register on income tax portal.
- Collect Documents/Information.
- Login to file ITR.
- Fill the Form.
- Claim Deductions.
- Pre-validate Bank Account.
- ITR Verification.
What is the due date for filing ITR?
- For most individuals, it’s July 31st of the assessment year.
What happens if I don’t file my ITR?
- Failing to file your ITR within the due date can attract penalties and interest on the outstanding tax amount. Additionally, you may get income tax notice from the Income Tax Department.
Is it necessary to verify my ITR after filing?
- Yes, it is essential to verify your ITR after filing. You can verify it electronically using Aadhaar OTP, EVC (Electronic Verification Code), or by sending a signed physical copy to the CPC (Centralized Processing Centre) within a specified time.
Can I revise my ITR if I make a mistake?
- Yes, you can revise your ITR any number of times upto 31st December if you’ve made a mistake or omitted any details.
Do I need to pay tax if my income is below the basic exemption limit?
- No, if your total income is below the basic exemption limit, you’re not liable to pay any income tax. However, filing an ITR may still be necessary in certain cases, like if you want to claim a refund or apply for loan or visa.
What is Form 16 for freshers?
Form 16 serves as a certificate provided by employers to their employees, confirming the deduction of TDS (Tax Deducted at Source). Issued annually, it encompasses the total salary amount and the corresponding tax deductions made from an employee’s income throughout the financial year.
- Is first year salary tax free?
Individuals below 60 years of age with an income of up to Rs. 2.5 lakh are exempt from paying income tax. However, it’s observed that many salaried individuals believe their tax liability is settled because their employer deducted TDS.
What our clients say
