Filing your Income Tax Return is an annual obligation that most salaried employees approach with a mix of confusion and dread. Yet the process, when understood step by step, is straightforward. The Income Tax Department has progressively simplified e-filing, pre-filling much of the data from employer TDS filings and financial transaction records. This guide walks you through the entire process for FY 2025-26, assessment year 2026-27, from gathering documents to verifying your filed return.
Which ITR Form Should You Use
Salaried individuals need to pick between ITR-1 and ITR-2. ITR-1, also called Sahaj, is for residents with total income up to 50 lakh from salary, one house property, other sources like interest and dividends, and agricultural income up to 5,000. If you have capital gains from stock sales, income from multiple house properties, income exceeding 50 lakh, foreign income, foreign assets, or are a company director, you must use ITR-2. Choosing the wrong form will result in a defective return notice. Check our ITR filing reference guide for a quick decision flowchart.
The Document Checklist
Before you begin, gather these documents: Form 16 from your employer, which summarises your salary, deductions, and TDS; Form 26AS from the TRACES portal, showing all TDS credits and tax deposits; Annual Information Statement from the income tax portal, listing your financial transactions; bank statements for all savings and current accounts; capital gains statements from your broker and mutual fund houses; rent receipts and rental agreement if claiming HRA; home loan interest certificate; premium receipts for life insurance, health insurance, and NPS; donation receipts with 80G registration details; and details of any other income sources.
Step 1: Reconcile Form 26AS and AIS
The most critical pre-filing step is reconciling your Form 26AS and AIS with your own records. Form 26AS shows TDS deducted by your employer, banks, and other deductors. If any TDS is missing, contact the deductor to file a correction. AIS lists high-value transactions including mutual fund purchases and redemptions, stock transactions, property purchases, cash deposits, and foreign remittances. If any transaction is incorrect or not yours, raise a dispute on the portal. Mismatches between your ITR and AIS data are the primary trigger for scrutiny notices.
Step 2: Compute Your Total Income
Start with your gross salary from Form 16 Part B. Subtract exempt allowances like HRA, LTA, and standard deduction. Add income from house property, which is net of municipal taxes and interest deduction if applicable. Add capital gains from equity, mutual fund, and property transactions. Add income from other sources like savings account interest, FD interest, dividend income, and freelance income. From the gross total income, subtract deductions under Chapter VI-A, which includes 80C, 80D, 80E, 80G, 80CCD, and others. The result is your total taxable income. The income tax calculator can handle this entire computation for you.
Step 3: Choose Your Tax Regime
Before filing, confirm which regime results in lower tax. Even if your employer deducted TDS under the new regime, you can switch to the old regime at the time of filing. Compute the tax payable under both regimes and choose the one that yields the lower amount. The old vs new regime calculator gives you this comparison in seconds. Your choice is declared in the ITR form itself.
Step 4: File Online on the Income Tax Portal
Log into the e-filing portal with your PAN and password. Select the assessment year, the correct ITR form, and the filing mode. The pre-filled data from your employer and banks will be populated automatically. Review each section: personal information, salary details, house property income, capital gains, other sources, deductions, and tax payments. Enter any additional information not pre-filled, such as exempt income, investment details, and foreign assets if applicable. Compute the tax liability and compare it against TDS and advance tax already paid.
Step 5: Pay Any Outstanding Tax or Claim Refund
If your tax liability exceeds TDS and advance tax paid, you need to pay the balance through the e-pay tax facility on the portal before submitting the return. Note the challan details and enter them in the ITR. If you have overpaid, the excess will be processed as a refund directly to your bank account linked with your PAN. Ensure your bank account is pre-validated on the portal for seamless refund processing. If your advance tax payments were short, you may owe interest under 234B and 234C -- check your obligations with the advance tax calculator.
Step 6: Verify Your Return
A filed return is not valid until verified. The easiest method is e-verification through Aadhaar OTP, net banking, or DSC. You must verify within 30 days of filing. If you miss this window, your return is treated as not filed, which can result in late filing fees and loss of carry-forward benefits for capital losses. Alternatively, you can send a signed physical copy of the ITR-V to CPC Bengaluru, but e-verification is instant and recommended.
Common Filing Mistakes to Avoid
Not reporting interest income from savings accounts and fixed deposits is the most common error -- the department knows about this income from your AIS. Forgetting to include capital gains from mutual fund switches and SIP redemptions is another frequent mistake. Filing under the wrong ITR form, not verifying the return within 30 days, claiming deductions under the new regime when they are not available, and not reconciling Form 26AS with claimed TDS are other errors that lead to notices. A thorough review before submission takes 15 minutes and saves months of potential hassle.
What Happens After Filing
After successful verification, CPC processes your return. If it matches the department's records, you receive an intimation under Section 143(1), either confirming the tax paid or adjusting the refund. This intimation typically arrives within 30 to 60 days of filing. If the department finds discrepancies, they may issue a notice under Section 143(1)(a) for minor adjustments or 143(2) for detailed scrutiny. Always respond to notices within the stipulated time. Keep your acknowledgment number and filed return accessible for at least 6 years. Our complete ITR filing guide has a post-filing checklist to ensure you do not miss any step.