First-Time Taxpayer? Here’s What You Need to Know for ITR Filing in AY 2025-26

Filing Income Tax Returns (ITR) for the first time can seem daunting. However, with a clear understanding of the key aspects, the process becomes much simpler. Here are five important tips for first-time filers for the Assessment Year (AY) 2025-26, corresponding to the Financial Year (FY) 2024-25.

1. Choose the Right ITR Form

Selecting the correct ITR form is critical based on your income sources, residency status, and total income. For salaried individuals earning up to Rs. 50 lakh from salary, one house property, or other sources (e.g., interest), ITR-1 (Sahaj) is the right form. If you have capital gains, multiple properties, and no business income, ITR-2 is applicable.
For professionals or individuals under the presumptive taxation scheme, ITR-3 or ITR-4 should be used. Using the wrong form could lead to rejection of your return. The Income Tax Department’s e-filing portal offers a tool to help you select the appropriate form. Always double-check your information to avoid errors.

2. Understand the New and Old Tax Regimes

For AY 2025-26, the new tax regime will be the default option, offering lower tax rates but fewer deductions. It includes a standard deduction of Rs. 75,000 for salaried individuals and a rebate of up to Rs. 60,000 under Section 87A, making income up to Rs. 12 lakh tax-free.
On the other hand, the old tax regime allows more deductions, such as those under Sections 80C, 80D, and 24(b) for home loan interest, but it comes with higher tax rates.
First-time filers should carefully compare both regimes to determine which option minimizes their tax liability. Non-business taxpayers can choose either regime annually, but the choice must be made by the filing deadline (July 31 for non-audited cases). Missing the deadline will require opting for the new tax regime.

3. Disclose All Sources of Income

Even if your total income is below the taxable threshold (Rs. 3 lakh under the new regime for individuals under 60), all sources of income must be disclosed. This includes salary, interest from savings or fixed deposits, rental income, capital gains, and gifts worth more than Rs. 50,000.
Documents such as Form 16 (from employers), Form 26AS, and the Annual Information Statement (AIS) can help verify your income and TDS details. Failing to report income could result in scrutiny or notices from the tax department. Keep records of these documents for future reference, but there is no need to attach them to your ITR.

4. Adhere to Deadlines and Complete E-Verification

The deadline for filing ITR for taxpayers not requiring an audit is July 31. If missed, a penalty of Rs. 5,000 (or Rs. 1,000 for income less than Rs. 5 lakh) will apply, along with interest under Section 234A at 1% per month on unpaid taxes.
Late returns can be filed by December 31, 2025, or within four years (by March 31, 2029) through an updated return (ITR-U), but penalties still apply.
After filing, e-verification is mandatory within 30 days using Aadhaar OTP, net banking, or eVC. Ensure that your PAN is linked with Aadhaar, as inactive PAN cards may delay refunds or processing.

5. Claim Deductions and Avoid Common Mistakes

Under the old regime, you can claim deductions such as:

• Rs. 1.5 lakh under Section 80C (e.g., PPF, ELSS)
• Rs. 2 lakh under Section 24(b) for home loan interest

Section 80D for medical insurance

The new regime offers fewer deductions, but it still allows a standard deduction and family pension deductions.
Ensure to cross-check your details with AIS and Form 26AS for accuracy. Common mistakes such as incorrect personal details, hidden income, or selecting the wrong tax regime can cause delays in processing or lead to notices. If claiming deductions under Sections 80DD or 80U, submit Form 10-IA. Complete the e-verification immediately after filing.

Additional Tips

The e-filing portal now offers auto-fill options for data from AIS and Form 26AS. Make use of this feature to save time and reduce errors. Even if your income is below the exemption limit, you must file ITR if you have:

• Deposits exceeding Rs. 1 crore in current accounts
• Foreign travel expenditures exceeding Rs. 2 lakh

TDS/TCS exceeding Rs. 25,000

If you have complex income sources such as capital gains, it is advisable to consult a tax professional for expert assistance.

By understanding these essential aspects, first-time taxpayers can ensure a smooth and efficient ITR filing experience.