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Income Tax Return Filing: Missed Income When Filing ITR

IndianMoney.com Research Team | Updated On Tuesday, July 24,2018, 05:57 PM

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Income Tax Return Filing: Missed Income When Filing ITR

 

 

 

You and other salaried employees are getting ready to file ITR. There is a tendency among the salaried to disclose, only salary income and not bother to disclose other income.

This can be a costly mistake and fetch you an income tax notice. You present an incorrect picture of your income which changes the tax liability.

There is a simple way to solve this problem. You must write down all income under the 5 heads of income:

 

 

This will help identify all income which means efficient tax planning. Want to know more on Tax Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

 

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Income You Miss When Filing ITR

 

1. Income from SB Account and FDs

 

Salaried employees when filing ITR generally disclose all salary income. They furnish a copy of Form 16 and do not bother to disclose income from savings bank accounts and FDs.

Many salaried people enjoy interest income from savings bank accounts and FDs. They believe interest income from SB accounts is tax free and TDS has already been deducted from FD interest.

Interest income from SB accounts is tax free up to Rs 10,000 a year under Section 80TTA of the Income Tax Act. Even if your income is less than this, you must include it when filing ITR.

Yes, banks deduct TDS on FD interest income. Banks are liable to deduct TDS at the rate of 10% on interest income, if the interest income earned is more than 10%. If you fall in the higher tax slabs of 20% or 30%, you will have to file ITR and pay tax on FD interest, depending on the tax slab you fall under.

 

2. Capital gains from switching of mutual funds

 

You may not report the profit or loss on switching from one mutual fund scheme to another of the same fund house. You may switch between mutual fund schemes of the same fund house, because of poor performance.

The profit/loss you get on switching between mutual fund schemes may be short term or long term. Tax treatment is different for short term and long term gains or losses. Tax treatment is also different for equity-oriented funds and debt funds. You must disclose capital gains on switching between mutual fund schemes.

 

3. Income of a minor child

 

Income earned by a minor child is clubbed with the income of the higher earning parent. Parents invest the money they get as gifts on minor child’s birthday or other occasions. The interest/income earned on these investments is clubbed with the income of the higher earning parent.

Income up to Rs 1,500 per child per year is exempt from taxes. If the amount exceeds Rs 1,500 per year, this income is clubbed with the income of the higher earning parent. If a minor gets an income through specialized skill, knowledge or effort, this income is not clubbed with parent’s income.

 

SEE ALSO: Income Tax E-filing For Gifts Received During The Year 2018

 

4. Gifts received when carrying out business

 

Today, business is promoted through discounts and gifts. You might have enjoyed costly gifts in gold or even a car from business associates. Foreign tours could also be a great incentive. You must disclose these gifts when filing ITR.

 

5. Notional rent from property deemed to be let out

 

In case of a self-occupied house, taxable income is taken as NIL. This option is available for a house which you own and occupy. If you have more than one house, you have to treat one of the houses as self-occupied and the other house is treated as deemed to be let out.

For a deemed to be let out property, you must offer notional rental income to tax. This is the income which is normally expected to be received, if a property is let out in the open market.

 

Be Wise, Get Rich.

 

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IndianMoney.com Research Team

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