Well, the idea of filing income tax would give many of us nightmares. With the last date for filing income tax soon approaching, most of us would have already begun the process of filing our income tax returns. The due date for filing personal income-tax returns for the financial year 2013-14 is 31st July 2014.
Generally, many us who are employed will get a Form 16 from our employer and we usually refer to details in Form 16 to file our returns. However, there are few other heads of income which we should report (taxable or non-taxable) while filing our tax returns.
Employers would give us our Form 16 based on the declaration and proofs we give to them. Most of us would declare and submit proofs for House Rent Allowance (HRA), Leave Travel Allowance (LTA) and our savings u/s 80C (PPF, EPF, Insurance etc).
There are a few more sources of income which one MUST disclose. The disclosure can be done either to our employer (so that they are taken care of in Form 16) or while filing our returns.
Some of the very important disclosures are:
Interest earned from Savings Bank Account
Interest earned from savings account is tax free up to Rs 10,000/-. Any interest earned above that is taxable and should be declared.
Interest earned from Fixed Deposits
Interest received from fixed deposits is taxable as per one’s 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.
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.
Interest earned on Postal deposits and National Savings Certificates (NSCs)
Interest earned on Postal deposits and National Savings Certificates (NSCs) is taxable and needs to be declared.
Cash gifts received for more than Rs 50,000/- should be declared as they are taxable (unless for specific occasions like marriage, will, etc).
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).
Similarly, any losses should be declared as these help in offsetting gains for subsequent years.
Exempt Income (e.g. Interest earned on PPF/EPF accounts) should be declared for auditing purposes only. This is a tax free income.
Dividend income is tax free in the hands of the investor. However this should be declared while filing income tax returns.
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. This would ensure peace of mind and will make us free from worrying on any further enquiries from the income tax department (which sounds chilly!!!).
Disclaimer: The author has taken due care and caution to compile and analyze the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. The author does not accept any liability whatsoever arising from the use of any of the above contents.