Filing the income tax returns requires the individual taxpayer to include all the relevant income in their disclosures. The salaried who feel that they have everything covered because all the information is present in Form 16 often miss out on certain details.
This needs to be avoided and hence, they have to take care about the fact that they are paying attention to the small amounts that might have been received from other areas. Here are some such heads of income that should not be missed out.
Dividends
There are often investments that have been made some time ago in some companies or even mutual fund schemes. These investments then lie forgotten as the salaried individual does not pay much attention because of the small amount that is actually invested.
The problem arises when this investment pays a dividend and some amount comes to the individual as income. This might seem to be an insignificant amount, but it should not be ignored and has to be shown as income under the head of Income from other sources.
Additional attention should also be given to the point as to whether there is any tax deducted on this dividend and if yes, then it can be counted as part of the tax paid during the year.
Interest Earned
There are two ways in which the salaried individual could end up earning interest from their banks.
One is through the route of savings bank interest, whereby the amount that is lying in the savings bank account earns interest at the applicable rates based on the amount involved. This can be a very small amount if the balance in the account is not much. The main point here is that this savings bank interest, even if it seems insignificant, should be shown, otherwise there will be a mismatch with the details with the tax department, which could lead to a notice being sent.
The other way in which interest is earned from the bank is from the fixed deposits that have been created. Many of these deposits are cumulative in nature, so the interest is not even reflected in the bank account as this accrues and accumulates, only to be paid out at maturity. This is why special attention needs to be given to this area to ensure that this is not missed out.
Capital Gains
If there are any investments that have been sold during the year, then there is a good chance of a capital gains that would have arisen on it. The individual often misses out on these details because it is a one-off transaction, and they might not remember the details when it is the time of filing the tax return.
There is also some work involved in the capital gains working because the old cost has to be determined and then compared to the sale price. Determining the cost from an investment made long ago becomes a tedious task.
In many cases, they also think that the amount involved is small and that this does not matter, but that is not the case because even if there is a small amount of gain, this has to be offered for tax and the amount paid.
Additional Income
A lot of people often do some work on the side and this gives them additional income. While the salaried might not want this information to be given to their employer who might frown upon such activities, the situation on the tax front is different.
If there is any income which has arisen from these extra efforts, then this has to be shown in the tax return and the tax paid on it. Income earned cannot be evaded and this could lead to a big financial hit in the future if it is not disclosed and hence, special care has to be taken to show these details.
Arnav Pandya is the founder of Moneyeduschool.
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