Filing income tax returns can be an intimidating and exhausting process. There are a plethora of sources and deductions to report and it is easy to get lost under reams of paperwork. In the midst of the chase to the deadline for ITR filing, sometimes you might omit declaration of certain incomes. Not disclosing several types of income can have serious repercussions, however. Most often, interest income from banks — savings and fixed deposits — and post office are missed out to be reported while filing income tax returns. These should be shown in the return even when Form 15G (for taxpayers below the age of 60) or 15H (for senior citizens) has been filed, provided the earning is not exempt under Section 10 and total income exceeds the maximum amount not taxed. Remember that the exercise of filing income tax returns is not just about paying taxes but also about disclosure of sources of income.
It is the one opportunity in the year you can take time out to take stock of your income and earnings and investments. It would be a good idea to use this time to keep your records. However, sometimes you may forget certain income sources that don’t strike you as obvious, or because of innocent omission as a first time filer. Incomes such as dividends, interest on tax-free bonds, eligible gifts, etc should also be reported even though they are tax exempt. Here are a few income sources you should keep in mind while making the record, which are also liable to be taxed:
Interest on savings account is taxable as per Income tax slab rates applicable to the investor. Interest earned from fixed deposits is also liable to be taxed on an accrual basis at the slab rate applicable. However, deduction under section 80TTA is allowed on interest from savings account and fixed deposit account capped at Rs.10,000 in a year. This deduction is available only to individuals and HUFs. If you furnish Form 15G or Form 15H, the bank won’t deduct TDS. Also, it is important to note here that senior citizens receiving interest income from FDs, savings account and recurring deposits can avail income tax exemption of up to Rs 50,000 annually.
In case total commissions earned by you as an insurance agent is less than Rs 60,000 from all sources, then certain ad hoc deductions are available to you which can be deducted from the commission income. This income is then taxed under the head Profits & Gains of Business & Profession. If the commission earned by you as an insurance agent exceeds Rs 60,000 from all sources, it will be treated in the same way as that of a freelancer or a professional.
Income from property is considered as taxable. This could be any property - commercial, residential or industrial, including a residential house, office building, shop, factory, hall etc and any land associated with the building (e.g. garden, compound, playground, car parking space etc). Under property, you need to pay tax not only on the actual income but also on deemed rental from the property in such cases. Since it gets a little complicated, you may miss out of recording it in ITR filing. But the deemed rental is to be calculated based on an assessment of the potential income that a property is capable of earning.
Uncommuted pension or any periodical payment of pension is fully taxable as salary. Commuted pension or lump sum received may be exempt in case you were a government employee. For private employees, it would only be partially exempt
If you also take side gigs or projects, it is easy to forget them during ITR filing as they may not seem as consistent as salary. However, each earning is to be accounted for while filing income tax returns. In most cases, freelance money is only deducted to the extent of profit - any expenses related to the work are to be deducted from the money or fee received.
Make sure you have included and reported all incomes from all sources before pressing that ‘submit’ button on the e-filing portal! Mutual funds are a great channel to accelerate your investments and beat inflation. If you are looking to invest in mutual funds, be sure to do it via a trustworthy online channel that places a premium on transparency. Finserv MARKETS is a great fit. Documentation is minimal, the process if fast and most importantly, they are no hidden charges.