5 incomes you must not miss to report in your Income Tax Return for AY 2019-20
August, 19th 2019
The last date for filing of income tax return (ITR) for the Assessment Year 2019-20 has been extended to August 31, 2019. It is a welcome relief for a large number of taxpayers, especially salaried class employees who got their Form 16 in the second week of July 2019. The ITR forms notified for the Assessment Year 2019-20 seek additional disclosures in respect of all those incomes which are often subject to tax disputes or which are prone to tax avoidance. Further, the Central Board of Direct Taxes (CBDT) has also made changes in Form 16 (TDS Certificate for Salary Income) and Form 24Q (TDS return in respect of salary) to sync them with the new ITR forms. Thus, the CBDT has intensively increased the scope of disclosure under new ITR forms to unravel the instances of underreporting or misreporting of income.
Any carelessness in reporting of income this year might get taxpayers in trouble. Thus, it is advisable to be extra careful while filing income-tax return as even a small mistake can result in the issue of a notice from the Income Tax Department.
If a taxpayer isn’t taking any assistance of a tax expert for filing of income tax return, he should carefully scrutinize his all financial transactions entered into during the Financial Year 2018-19. The financial transactions can be traced through bank statements, credit card statements and e-wallets, etc. A taxpayer may find some credit entries in these statements which he is supposed to report in the income tax return.
It has been noticed that taxpayers generally omit to report certain incomes which accrue to them intermittently or as the windfall gains. For example, income from free lancing assignments, interest from bank deposits, etc. Such omission may result in the issue of a notice from the Income Tax Department asking the taxpayer to explain the reason for not reporting such incomes. It must be noted that any underreporting or misreporting of income could result in levy of penalty of 50% or 200%, respectively, of the amount of tax sought to be evaded. Some of the common incomes which a taxpayer generally omits to report in the income tax return are as under:
1. Exempt income If a taxpayer has earned any exempt income during the financial year, such as dividend income, interest from public provident fund (PPF), sum received under a life insurance policy, agricultural income, etc., then the same should be reported in the ITR. Though no tax is payable on such exempt incomes, yet the same are required to be reported in the ITR to avoid any kind of proceedings from the Income Tax Department.
Watch: Income Tax Return 2019: Who all should file IT return this year? Benefits explained
2. Gifts Gifts are taxable in the hands of receiver unless the same are received from relatives or on specified occasions. Hence, gifts should be duly disclosed in the income tax return and taxes should be paid on it if they are taxable. The non-disclosure of taxable gifts would fall under the category of misreporting of income.
3. Side Incomes Many taxpayers don’t show their side incomes earned during a financial year such as interest received from banks, interest on income-tax refund, commission income, etc., in the income tax return. Taxpayers would be committing a mistake if they think that side incomes aren’t taxable or the same are not required to be reported under ITR if tax is already deducted from such incomes.
All sorts of incomes are required to be reported in the ITR, irrespective of the amount of income or whether TDS has been deducted from it or not. Failure to report these incomes would be deemed as misreporting of income.
4. Deemed Rental Income If a taxpayer owns more than one house property (not being a let-out property), then only one house property of the taxpayer’s choice is treated as self-occupied property and all other house properties are deemed to be let-out properties for income-tax purposes. In case of deemed let-out property, the tax is charged on notional rental value of such property. Generally, taxpayers omit to offer to tax notional rental value of deemed let-out property which can lead to proceedings from the Income Tax Department.
It must be noted that from the Assessment Year 2020-21, taxpayers would be able to treat two house properties as self-occupied properties.
5. Income from previous employer If an employee has switched job during the financial year, then he should furnish the details of his salary income, due to or received by him from the previous employer, and tax deducted therefrom to his current employer so that tax may be deducted by the current employer. However, if he forget to declare the income from the previous employer to the current employer, there would be deficiency in the TDS deducted and deposited by the new employer and total salary income appearing in Form 16. In such cases, an employee should club the incomes received from both employers and pay tax accordingly. Further, salary income is required to be reported employer-wise under ITR.