First-Time Tax Filers' Guide: 8 Steps To Ensure A Hassle-Free Income Tax Refund

Filing your income tax return for the first time can be a daunting experience. Even though income tax return filing has been made easy these days, ensuring you keep track of the various procedural requirements can be tricky. Right from registering on the income tax portal, linking your PAN with Aadhaar, uploading relevant documents to choosing the right ITR form to filing and e-verifying your return; each step of the income tax filing process is important. Missing any of the information or incorrectly filling any of these requirements can delay the processing of your return and your refund (if applicable). 

Below is a list of some of the important steps every beginner must take while filing their returns.

1. Register with the income tax portal: As a first-time tax filer, you must ensure you have registered yourself with the income-tax e-filing website. You will find an option to “Register,” and you must register yourself as a “Taxpayer” along with your Permanent Account Number (PAN).

2. Link your PAN with Aadhaar: During the registration process, you will also be asked to validate your details with the UIDAI database so that your PAN and Aadhaar are linked, which is required for individual taxpayers under the income tax provisions.

3. Validating PAN details & providing contact information: Please ensure that, in your basic details, your information is updated as per the details available in your PAN records. “Details such as Name, Date of Birth, Gender, and Residential Status must match in your contact information as per the PAN database and it should be validated. Also, you must update your profile section with contact details such as mobile number, email address and postal address,” says Santhosh Sivaraj, Partner - Global Mobility Services Tax & Regulatory Advisory, BDO India.

4. Validate your bank account details in the tax portal: Validating your bank account in the income-tax portal is a pre-requirement to receive income tax refunds, as the Income Tax Department can only electronically transfer tax refunds to the taxpayers’ bank accounts. The tax department checks that the bank account is linked with your PAN and validated in the income-tax portal.

The prerequisites for validating your bank account in the income-tax portal are:

• Taxpayers should be registered in the income tax portal

• The taxpayer must have a valid bank account number

• The taxpayer must have the IFSC code and branch details of the bank account

• The taxpayer must have access to the Aadhaar-registered mobile number (as OTPs would be sent only to the registered number)

• The name as per the PAN and the name as per your bank account must match.

“Once you have updated as required above, you will be led to validate through Aadhaar OTP and your bank account will be validated. You can cross-verify the status of validation through my profile page of your income-tax e-filing portal once you have logged into your account,” says Sivaraj.

5. Determination of type of income and the correct form: Indian tax provisions tax you on five heads of income, namely salary, income from house property, capital, business or profession and income from other sources. Depending on the type of income and threshold, choose the Income Tax Return (ITR) form accordingly. Incorrect form selection can result in a delay in processing the return and refund issuance.

6. Claiming accurate deductions in tax return: Ensure you are claiming the right deductions in your tax return along with documentary evidence. Any mismatch in deductions claimed in the tax return as against details available with the tax authorities can trigger a delay in processing your tax returns.

7. Verify the underlying documents where you are claiming tax credits: Before you e-file your tax return, please cross verify all your tax credit claims such as Tax Deducted at Source (TDS) and Tax Collection at Source (TCS) through the information available in Form 26AS, Annual Information Statement (AIS) and Total Income Statement (TIS) to ensure the accuracy of your claims.

8. E-verification of tax return post e-filing: Last but not least, for the first-time tax filers, the tax filing is a 2-step process. “The first step is where you will electronically upload your income tax form to the income tax portal. The second step is to e-verify the tax return uploaded through various options provided, such as digital signature, verifying with Aadhaar OTP, etc,” informs Sivaraj.

This step is critical, as without e-verification, the tax return uploaded would be invalid, and tax refunds will not be processed. As per the tax provisions, it is important to e-verify your tax return within 30 days of e-filing your tax return.