Looking to file taxes on your own? Here is what you need to keep in mind

• Salaried individuals who have started their careers can file their taxes on their own, as the e-filing portal has been simplified over the last few years.
  
• Based on the deductions one can avail, one needs to decide whether to opt for the old or the new tax regime.
  
• It is important to add all interest income from savings accounts, fixed deposits, etc, and declare it when filing taxes.
  

It is that time of the year again – when we have to file our taxes. While we can take the services of a professional to help us file our taxes, many of us may prefer doing this on our own since the process has been simplified in recent times.

While many of us may be overwhelmed by the perceived complexity of filing taxes, it need not be such a difficult task. If you have just started working and/or if you have limited sources of income, you can easily file your returns on your own.

“Salaried individuals who have started their careers can file their taxes on their own, as the e-filing portal has been simplified from the last few years. A lot of information is pre-filled when one files their India tax return," says Akhil Chandna, partner, Grant Thornton Bharat, a professional services firm.

If an individual has a limited number of income sources such as salary, interest from deposits with banks, etc, and has a basic understanding of the tax laws and regulations, she can choose to file her taxes on her own.

Chandna says that if you are filing your own taxes, here are some of the things that you need to do.

Gather all the necessary documents: Collect your salary slips, bank statements, Form 16, investment receipts, any donations made, rent receipts, Form 26AS, AIS/TIS etc, and have them all in one place.

Choose the correct Income Tax Return (ITR )Form: There are different tax forms applicable for different types of income, so it is important to know which form is required to be filled. Choosing an incorrect form may result in an error in filing returns, necessitating a revision of the tax return.

Selecting the old or the new tax regime: From Budget 2023-24, the new tax regime is the default tax regime. The new tax regime has a revised set of slabs that can reduce tax outgo.

However, most of the deductions like 80C, 80D, and deductions on home loan principal, and interest repayment are not available under the new tax regime. For this reason, many popular tax-saving investments have lost their charm under the new tax regime.

Therefore, it is important to consider all the available deductions, and choose the right tax regime. In most cases, if you do not have a home loan – which you are not likely to have when you start your job – the new tax regime would make more sense.

Disclosures to be made: Where applicable, these disclosures need to be made: bank accounts, assets and liabilities schedule, schedule of foreign assets, number of days’ presence in India, details of directorships, unlisted shares, etc.

Common mistakes to avoid

Tax filing involves many steps, and there are some mistakes that one may be making. This is how you can avoid them:

Not declaring interest income: “Remember to declare the interest on savings bank a/c, income tax refund (if any), etc, in your income. Many times, people miss out on the same,” says Vivek Jalan, partner, Tax Connect Advisory. He adds that interest on fixed deposits/debentures/etc as available in Form 26AS/AIS should be declared as income.

There may be a difference in the amounts reported in 26AS, and what you actually receive in your bank account due to the fact that interest accrues periodically, but may be paid only on maturity. However, TDS (tax deducted at source) may be cut on an accrual basis.

Not disclosing exempt income: All income must be disclosed, irrespective of whether it is taxable or exempt. Many taxpayers, out of ignorance, fail to provide details of proceeds from life insurance policies or gifts from relatives, which are exempt from tax. Though such income is not liable to be taxed, however, it’s mandatory to disclose this income in your tax return.

Not e-verifying tax returns on time: The timeline to e-verify tax returns has been reduced from 90 days to 30 days for all tax returns being filed after 01 August 2022. Therefore, one should e-verify the tax return immediately after filing the tax return.

When in doubt, seek help from a professional

India is the second-most complicated tax jurisdiction in Asia Pacific after China. “It has become all the more complicated with the massive data analytics and data mining conducted by the Income Tax Department and also sharing of the data between various agencies like banks, investment vehicles, GST, etc,” says Jalan. Incorrectly filing taxes may result in a tax notice.

While you can file your own taxes, especially if you have just started your career, you should be sure to seek the guidance of a tax expert in case of doubts.