90% Salary Employee commit a mistake while filing their Income Tax Return, by not disclosing it.
Are you one of them? Then read till the end.
Salary Employees usually take into consideration only the income from Salary & House Property while filing their income tax return (ITR).
If I say bluntly, 90% Salary Employees ITR filed or being filed basis Form 16. Form 16 does contain all details that other part of the story.
If you are thinking, introspecting, how you have filed your ITR in previous years? then it’s Best Time to correct your mistake in the current year.
It’s mandatory to factor in Income from “Other Sources” in your Income Tax Return (ITR). If you don’t disclose it, then the Income Tax Department will consider it as TAX EVASION.
The Tax Department may send you a notice seeking a detailed explanation for not including it and demand TAX & charge penalty and interest thereon.
Let’s figure out, what constitutes income from “Other Sources”
income from “Other Sources”- Means any income which is not taxable in any other head of Income Tax. In simple word, leftover Tax option.
1st Head – Income from Salary
2nd Head – Income from House Property
3rd Head – Income from Business or Profession
4th head – Income from Captial Gain
5th Head – Income from “Other Sources”
Following income generally Tax in this head from Salary Employee point of view.
- Interest on a Saving Account
The income earned as interest from a Saving account is not fully taxable. Some Part of it exempt from Tax.
The Income Tax Act allows a deduction under section 80TTA up to Rs 10000/-. Any amount above Rs 10000/- is taxable.
In case you have earned less than Rs 10000/-. Then in that case it will be better to disclose Income in ITR and claim exemption.
Point to wonder, Why Salary people make a mistake
Reasons are –
- Almost all bank credit Interest on 31st
- The employer never asks for this.
This is the reason, it slips from Form 16
2. Dividend Income – Yes dividend income is taxable with some exemption. Usually, it’s a small amount, escape notice if you don’t have a bigger portfolio.
Better will be to make a record of it, disclose it and then claim exemption. You can show it in exempted income part in your ITR. Depending on the total dividend earn by you during the year.
This process makes your ITR unquestionable.
3. Interest on Tax Refund- Normally Tax refund get credit into your bank account. You don’t bother to segregate the Tax & Interest part from Intimation of Tax Refund under Section 143(1).
Yes, you need to segregate both and disclose the interesting part in your Income Tax Return and pay tax on it.
Yes, this Interest is also taxable.
Conclusion: It may be a bit confusing for Non-Financing background Salary employees to access their Income from others source while filing ITR.
The best advice will be to consult any Tax Professional if you get stuck at any point.