If you are a salaried individual, you may assume that you only have a salary as your income. However, income can come to you in the form of interest from your bank account. Also, even if you don’t have to pay tax on the income, you still need to report it. There are multiple reasons why you might miss out on mentioning your income or wrongly report the income. Here are some provisions that you need to be careful with.
REPORT LONG-TERM CAPITAL GAINS IN YOUR ITR
A sale of equity shares or units of equity-oriented funds that result in longterm capital gains must be reported in your income tax returns (ITR). “These are taxed at a concessional rate of 10% on the gains in excess of ₹1 lakh without providing the benefits of indexation.
If your total gains are less than ₹1 lakh, those must also be reported. Those who have reinvested their receipts from sale of mutual funds or equity shares into a similar asset or any other asset must report the sale transaction in their tax returns and pay capital gains (short-term or longterm as applicable). Long-term capital gains on debt fund are taxed at the rate of 20% after indexation. You must add short-term gains from debt funds to your overall income. They are subject to short-term capital gains tax (SCGT) as per the income tax slab you fall under," said Archit Gupta, founder and chief executive officer, Cleartax.com
TAX DUE MAY EXIST OWING TO LOWER TDS DEDUCTION
Even if tax is deducted on salary and tax deducted at source (TDS) is paid on your interest income, you may still notice that there are some taxes due. TDS normally get deducted at 10% if you provide your permanent account number (PAN). And if you are at a higher tax slab rate, then the TDS has been deducted at a lower rate. This means that you have to pay the remaining tax after calculating it. After you pay the tax due, either online or offline, it gets reflected. Hence, you should cross-check all your investment and withdrawals and the TDS details before filing your returns so that you don’t miss out on any of the tax dues.
REPORT ALL YOUR INCOMES
As a salaried individual, since your main source of income is your salary, you may assume that you just have to report income from salary.
However, at the least you may also get income in the form of interest from your savings bank account. You will get a statement of your interest income from your bank regularly. Though you may argue that the amount is low, you still need to report the income even if you don’t have to pay a tax. You may also have another source of income in the form of maturity of your fixed deposit, recurring deposit or any kind of cash gifts or bonuses you have received in the financial year. Even if your income is tax-free, you must report it in your ITR to avoid any errors.
MENTION ALL YOUR INVESTMENTS
If you have invested in financial instruments and had a loss, you should mention this while filing your returns. This is to set off and carry forward your capital loss. In case you don’t mention it, it will not get adjusted and you will end up paying more tax than required. Also in case you have made investments which are eligible for tax deduction, you should mention it while filing your returns to avoid any errors.
Through reporting your income correctly, your tax outgo is unlikely to be incorrect. You can collect all the details from the source of income. If you are not clear on how to declare all your income for taxation, you can seek help of a chartered accountant or a financial advisor. You can also use online portals to fill in the details.