As the deadline for filing your tax return (now extended to August 5th, 2016) draws near, are you scrambling to file your taxes? Not a difficult task in itself these days, what with the IT department simplifying the filing process by taking it online; not to mention the easy e-filing facilities being offered by other services providers.
Just make a note of your taxable income and input those details into the form that’s available online. Easy-peasy, right? But hold on, are you sure that you’ve made a note of ALL your taxable income? While most of us are aware of what our incomes are, it’s easy to overlook certain other amounts and forget to include these when filing our return. Income in the form of interest is one of these.
Additional Reading: Things To Know Before Filing Your Income Tax Return
We’re going to highlight a few investments that earn us interest. And while this certainly counts as income, people often forget to include it when filing their IT return.
Interest received in the final year from National Savings Certificates
National Savings Certificates (NSC) are great tax-saving instruments and for the period of the investment, the interest received isn’t taxed either. This is because the amount is reinvested and so is eligible for a deduction under Section 80C of the Income Tax act, up to the Rs. 1.5 lakh limit, of course. However, in the final year, the interest received cannot be reinvested and becomes taxable. People tend to think that because the interest isn’t taxable in the years preceding the final year of the investment that this holds good in the last year as well. We must tell you that this isn’t the case. All the interest that you receive in the final year must be shown as a part of your taxable income.
Additional Reading: Everything you need to know about National Savings Certificates
Interest from FDs linked to safe deposit lockers
When a customer takes a safe deposit locker, many banks insist that an FD be linked to it. This acts as security for the locker. The interest from this FD is either reinvested, put into the customer’s Savings Account or used to pay the locker fees. The bank is unlikely to deduct TDS from this deposit as the interest amount usually doesn’t exceed Rs. 10, 000, which is the amount eligible for exemption. Plus, if the interest goes directly towards paying the locker fees, it won’t reflect as interest in the savings book of the customer. Though this interest definitely counts towards your taxable income, it is easily overlooked.
Additional reading: Don’t let TDS Dilute Your FD
Got your bond application money back and interest too?
If you applied for tax-free bonds from institutions such as the National Highways Authority of India, Rural Electrification Corporation, Housing and Urban Development Corporation, etc. and weren’t allotted any or only received a partial allotment, you would have received your money back. Along with this money, you would have received interest on the amount as well, which is taxable. This interest amount is usually small and easy to miss when filing your return.
Public Provident Fund Interest
The interest received from the Public Provident Fund (PPF) is not taxable. However, it still needs to be declared when filing your return as income that has been claimed which is exempt from tax. So, don’t forget to add that in when filing your return.
Additional Reading: Your Guide To The Public Provident Fund
Now that you know what to watch out for, remember to keep a close track of all your investments and don’t forget to disclose all your income when filing your IT return.
And while there’s good news for those of you who haven’t filed your Income Tax return yet – the Government has been kind enough to extend the date for filing IT returns from 31st July to 5th August 2016 – don’t delay and get on with filing those returns!