Disclose all Income � Filing of Income Tax Returns
Most of the times the tax payers forget to include some of their incomes ( as detailed below) while computing their total income and tax liability. It is very important to include your entire income even if its meager to compute your total tax liability. This is generally happening to salaried tax payers, they normally file their tax returns based on the Form16 issued by their employer. It is advisable to declare his/her other incomes to his/her employer and deduct the appropriate tax like you submit the declaration/proof of your HRA, Investment U/s. 80C to claim tax exemption like PPF, Insurance, NSC etc. While filing your income tax returns include few other heads of income which we should report whether it is taxable or not.
There are few more sources of income which one must disclose. As mentioned in the earlier para, the disclosure can be done either to our employer and request him to deduct tax and include in Form 16 or declare at the time of filing your tax returns. You are also obliged to pay advance tax on these incomes.
Some of such incomes are given under :
1) Dividend Income – Dividend received from listed companies is tax free in the hands of the investor. However this should be declared while filing income tax returns
2) Exempt Income - Exempt Income like interest on PPF deposits should be declared for auditing purposes only. This is a tax free income
3) Interest earned from Savings Bank Account - Interest earned from savings bank account (including Post Office SB account) is tax free up to Rs 10,000/-. Any interest earned above the said limit is taxable and should be declared.
4) Interest earned from Fixed Deposits/Company Deposits - Interest received from fixed deposits is taxable as per ones income tax slab. Most of the times banks deduct 10% TDS when the interest accrued is more than Rs 10,000/- (unless one submits a Form 15 G/H). However, the actual tax liability will be more or less, depending upon the tax bracket one falls under after all incomes and deductions are claimed. Please remember that, you need to declare these incomes and pay tax even if you received interest as cash or accrued.
5) Capital Gains/Losses - Any Capital gains/losses made from trading equities, selling mutual funds, gold etc should be declared even though they may be non-taxable (e.g. for equities long term capital tax is NIL – if you sell the securities after one year ). Similarly, any losses should be declared as these help in offsetting gains for subsequent years
6) Interest earned from Recurring Deposits - Interest received from recurring deposits is taxable as per one's income tax slab. Banks do not cut any TDS on interest earned on recurring deposits and hence it becomes even more important to declare this source of income. Otherwise the entire gain received on the maturity date will be considered as that year's income
7) Interest earned on Postal deposits like PMS, Senior Citizens Savings Schemes, and National Savings Certificates (NSCs) – Interest earned on Postal deposits and National Savings Certificates (NSCs) is taxable and needs to be declared.
8) Cash Gifts - Cash gifts received for more than Rs 50,000/- should be declared as they are taxable (unless for specific occasions like marriage, will or received from close relatives etc)
9) Deemed Rental Income - According to the Indian Income Tax Act, if a taxpayer (resident or NRI) owns more than one house property, only one of them will be deemed as self-occupied. There will be no income tax on a self-occupied property. The other one, whether you rent it out or not, will be deemed to be given on rent. If you have not given the second property on rent, you will have to calculate deemed rental income on the second property (based on certain valuations prescribed by the income tax rules) and pay the tax thereof.
Most of the times we tend to overlook one or many of the above incomes. Hence, investing some extra time in preparing for filing one's income tax returns keeping the above in mind will make sure that we are compliant to all the requirements under the tax laws.
For more details and guidance, please contact your tax consultant
Best Regards
Prakash Nair
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