Overlooked Some income in Income Tax return? Here is what to do?

by Mr. VINEET AGARWAL , Director, KPMG

THE due date for filing personal tax returns for financial year 2012-13 (FY13) was August 5. It was earlier July 31 but was extended because of the rise in load factor on the income-tax server due to increase in e-filings.

While you would have taken all precautions in taking care of all your incomes, there could be a possibility that in your own wisdom you may have overlooked some incomes that should be offered to tax in the return.

Some examples can be:

 

VINEET AGARWAL ,
Director, KPMG

Fixed deposit interest..

Interest earned from fixed deposits is liable to tax under the Income tax Act, 1961 (IT Act). Some people believe interest from fixed deposit is not taxable, however, it is not true. Banks will deduct tax at 10 per cent on interest above Rs 10,000 and the balance tax needs to be deposited by the assessee.

Savings bank interest..

Interest from a savings bank account is taxable. Interest up to Rs. 10,000 is allowed as a deduction under Section 80TTA of the IT Act and the balance is liable to tax.

Interest accrued on NSC..

 Interest earned on NSC gets reinvested in the scheme and becomes eligible for a deduction under Section 80C of the IT Act.

The deduction for reinvested interest is available for first five years. However, we must not forget that such interest income is first taxable and needs to be included in the total income. Rental value of deemed to be let-out house property: If you have more than one house property then caution needs to be exercised while reporting this in your tax return. Under the IT Act, if you own more than one residential property, you can claim one of them as self-occupied and the other will be considered as `deemed to be let-out'. In case of property considered deemed to be let-out, a notional rent of the property will be taxable as house property income.

Miscellaneous incomes:

 You may have purchased a property or / made some financial investments and the broker would have passed commission to you. This commission is income and should be offered to tax. If any TDS has been done, the balance taxes needs to be deposited by you.

If you have discovered any such income that you have not reported in your tax return, the IT Act provides you an option to revise your tax returns under Section 139(5) of the IT Act.

Revisions can be made provided the omission of wrong statement in the original return was due to a bonafide inadvertence / mistake.

You can revise a return within one year from the end of the assessment year or /  before completion of assessment, whichever is earlier. Hence, revised return can be filed by March 31, 2015, or before completion on assessment, whichever is earlier for FY13.

The IT Act provides for a penalty of 100% of tax evaded to 300%. So it’s best to look at your income sources and if there is anything that has not been disclosed then file a revised return and lead a happy life. After all it’s always better to address any unnecessary questions from the tax officer later.

THE due date for filing personal tax returns for financial year 2012-13 (FY13) was August 5. It was earlier July 31 but was extended because of the rise in load factor on the income-tax server due to increase in e-filings.

While you would have taken all precautions in taking care of all your incomes, there could be a possibility that in your own wisdom you may have overlooked some incomes that should be offered to tax in the return. Some examples can be: Fixed deposit interest: Interest earned from fixed deposits is liable to tax under the Income tax Act, 1961 (IT Act).

Some people believe interest from fixed deposit is not taxable, however, it is not true. Banks will deduct tax at 10% on interest above Rs. 10,000 and the balance tax needs to be deposited by the assessee.

Savings bank interest..

Interest from a savings bank account is taxable. Interest up to Rs. 10,000 is allowed as a deduction under Section 80 TTA of the IT Act and the balance is liable to tax.

Interest accrued on NSC..

 Interest earned on NSC gets reinvested in the scheme and becomes eligible for a deduction under Section 80C of the IT Act. The deduction for reinvested interest is available for first 5 years. However, we must not forget that such interest income is first taxable and needs to be included in the total income.

Rental value of deemed to be let-out house property..

 If you have more than one house property then caution needs to be exercised while reporting this in your tax return. Under the IT Act, if you own more than one residential property, you can claim one of them as self-occupied and the other will be considered as `deemed to be let-out'. In case of property considered deemed to be let-out, a notional rent of the property will be taxable as house property income.

Miscellaneous incomes..

 You may have purchased a property or /  made some financial investments and the broker would have passed commission to you. This commission is income and should be offered to tax. If any TDS has been done, the balance taxes needs to be deposited by you.

If you have discovered any such income that you have not reported in your tax return, the IT Act provides you an option to revise your tax returns under Section 139(5) of the IT Act.

Revisions can be made provided the omission of wrong statement in the original return was due to a bonafide inadvertence / mistake.

You can revise a return within one year from the end of the assessment year or / before completion of assessment, whichever is earlier. Hence, revised return can be filed by March 31, 2015, or before completion on assessment, whichever is earlier for FY13.

The IT Act provides for a penalty of 100% of tax evaded to 300%. So, it’s best to look at your income sources and if there is anything that has not been disclosed then file a revised return and lead a happy life. After all it’s always better to address any unnecessary questions from the tax officer later. 

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