The date for filing IT returns has been postponed to December 31. However, while filing returns individual taxpayers need to be careful about listing income from all sources and not just their salary or business income.
For the last two years, the income tax department has been keen on capturing minute details such as interest income from savings or fixed deposits and major deposits into the taxpayer's bank accounts. “Taxpayers should pay extra attention to savings bank Interest, gifts coming into the bank account, any large sum from the sale of capital assets to match with the IT return,” says Suneel Dasari, founder, CEO @ EZTax.in, an online income tax filing portal.
This is very important as failing to do so can lead to tax notices. “Incorrect disclosure of assets and liabilities where required may lead to IT notices to prove assets or deposits and the attribution. Some of these notices may lead to confiscation, seizure and penalties and may damage the reputation for quick processing of future IT returns,” says Dasari. If the taxpayer is a non-resident, this may further complicate matters.
Here are four heads of income that you should keep in mind when filing taxes, especially if you are doing it on your own. It is recommended that you take help from a chartered accountant or a tax filing service when filing your IT returns.
Capital gains: Sale of any soft or hard assets must be included when filing taxes. The gains or losses need to be declared and the IT return along with attribution of the gain/loss needs to be included in the calculation to arrive at the tax refund or due.
Further, particulars of assets and instruments such as stocks, mutual funds, currencies, cryptos, along with those of hard assets such as property, land, gold, art and antiques should be disclosed when the total income for the assessment year is more than Rs 50 lakh. Remember to include your liabilities as well.
Interest: Generally, banks and financial institutions deduct the TDS from interest income and deposit the tax, except where the taxpayer is s senior or super senior citizen and/or an exception was declared with the bank. Such income and TDS information is available in Form 26AS. In case the information is not recorded in Form 26AS, the onus to declare it is with the taxpayer.
Dividend: Starting from FY2020-21, the dividend income is taxable in the hands of the taxpayer and at regular tax slab rates.
Unlisted shares, foreign assets: Taxpayers filing under Indian Resident status must disclose foreign assets and unlisted shares along with any other assets. In addition, the gain or loss from the sale of such assets must be disclosed as part of every filing. The DTAA (double taxation avoidance agreement) applies where the tax is deducted in the respective country where the tax was deducted or paid on the sale of such asset.
“If the Income declared in the IT return is inappropriate, it would lead to taxes, interest and penalty under Section 234. In general, the department typically sends Statement of Financial Transactions (SFT) Notification to address such discrepancies before taking any serious action,” says Dasari.