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 returns. The due date for filing personal income-tax returns for the financial year 2012-13 is July 31, 2013.
Generally, many of us who are employed will get a Form 16 from our employer and we usually refer to details in that form 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 submit. Most of us would declare and submit proofs for house rent allowance (HRA), leave travel allowance (LTA) and our savings under sections 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 them are:
1. Interest earned from savings bank account: This interest is tax free up to Rs. 10,000. Any interest earned above that is taxable and should be declared.
2. Interest earned from fixed deposits: This is taxable as per one’s income tax slab. Most of the time banks deduct 10 per cent TDS when the interest accrued is more than Rs. 10,000 (unless one submits 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.
3. Interest earned from recurring deposits: This interest 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.
4. Cash gifts: Cash gifts of over Rs. 50,000 should be declared as they are taxable (unless for specific occasions like marriage)
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). Similarly, any losses should be declared as these help in offsetting gains for subsequent years.
6. Exempt income: Exempt income (e.g. interest earned on PPF/EPF accounts) should be declared for auditing purposes only. This is a tax-free income.
7. Dividend income: Dividend income is tax free in the hands of the investor. However, this should be declared while filing income tax returns.