With the due date for filing income tax return for the financial year 2017-18 approaching fast, taxpayers across the country are busy filing their returns. Some incomes, like salary or pension, are obvious by their nature. However, many other incomes also need to be included in the tax return, irrespective of the fact whether they are taxable or not. Do not miss them out! And, importantly, remember to file the return on time. From this year, there is a fine for late filing of returns that can go up to Rs 10,000.
Another thing to note is that unlike the earlier norm, taxpayers are now required to show details of their income — including details of exempt income, income from house property and various allowances – in their ITR. Don’t let all this worry you though, help for filing tax returns is not hard to find. For instance, HDFC Bank offers on its website a facility to upload Form 16 & generate a basic tax return. This free e-filing of income tax returns can be done through HDFC Bank NetBanking. So, if you file yourself using HDFC Bank platform, the service is absolutely free. It also offers – in association with online filing platform ClearTax – help from a CA for an amount starting as low as Rs 199, translating into discount of over 60 percent!
Let’s look at the incomes that you may forget to mention:
1. Interest Income from Savings, Recurring and Fixed Deposits: These incomes are taxable as “Income from other sources” under the provisions of the Income-Tax Act, 1961, and are to be disclosed in the tax return under “Schedule OS”. Further, if banks have deducted tax at source (TDS) on such interest income, then details of TDS as per Form 16A should also be disclosed in the tax return to get an appropriate credit of taxes deducted and deposited by the bankers directly. In the absence of availability of Form 16A, the details of income and TDS on such income is available in Form 26AS (referred as tax credit statement) which can be downloaded from the income tax portal.
2. Dividend Income: Income received from companies for investment in the shares of the company is known as the dividend. Like interest income, dividend income will also be classified under the head “Income from Other Sources” and disclosed under the same schedule in the income tax return form. However, it is to be noted that dividend income less than Rs 10 lakh, received by individuals from domestic companies on which the company has paid dividend distribution tax, is exempt from income tax in the hands of individuals. That portion of the dividend income in excess of Rs 10 lakh will be taxed at the rate of 10%. Dividend income received by individuals from a foreign company is taxable as income from other sources at the slab rate applicable to the individual. In case the same income has been taxed in the overseas country from where such dividend income arises, the individual would be eligible to claim an appropriate tax credit in the country of residence.
3. Incomes from PPF, Tax-free Bonds, NSC: Most people often forget these incomes. Even though interest income from PPF is not taxable, it needs to be disclosed. Similar is the case with interest income from tax-free bonds, many have money invested in them. Income from other post office investments such as NSC also needs to be reported. The good news is that in the case of NSC – since interest is paid out on maturity but accrues annually – one can also claim a deduction under Section 80C for reinvestment of interest.
4. Capital Gains and Exemption: As per exemptions provided under Section 54, 54F, and 54EC, among others, the sale of certain capital assets – like mutual funds and equities – is exempt from tax subject to certain conditions. However, such gains must be reported in the income tax return filed by you. You are also required to fill the complete details of the exemption applicable in your case. If you fail to do this, you are likely to receive a notice from the Income Tax Department.
5. Income from House Property: Many people rent out a room or a part of a house property. Income from the rent earned on the annual value of the property owned is taxable under the head “Income from House property” and needs to be mentioned irrespective of amount. However, the tax is not payable in case of a self-occupied property. Moreover, a deduction is allowed for interest paid on the borrowed capital. In the income tax return, the taxability of an individual is limited to the percentage of the ownership in the property.
6. Agricultural Income: If income from agricultural income is under Rs 5,000, then it is exempt from tax. However, you still need to declare this income in the ITR-1. If the agricultural income is above Rs 5,000, then this income is required to be declared ITR-2. This income for the year has to be declared in the ‘Income from Other Sources’.
There are also important investment lessons that flow from the exercise of filing an income tax return. ITR opens our eyes to tax implications of all kinds investments, incomes and even spending. To get a deep understanding of everything – from saving to insurance to loans and even payments, visit this comprehensive learning centre.
This will help you start planning for the next financial year so that you take maximum advantage of all tax planning options. If you are filing through HDFC Bank NetBanking, you can get a great deal too – the bank is offering ClearTax’s automated tax planning service worth Rs 800 absolutely free! Refer this step by step guide & know how to pay your income tax returns online.
(This article is sponsored by HDFC Bank)