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There is little less than a day and a half left before the deadline for submitting the Income Tax return (ITR). The deadline, July 31, is fast approaching. Meet this deadline if you don’t want to pay late fees, default interest on taxes owed, and lose other benefits of filing the ITR before the due date.
At the same time, it is important not to forget to report any deferred or unusual income received in the last year, regardless of the amount. Most of this income is not taxable or exempt to some extent, but you must still report the amount in the appropriate column and schedule and claim the tax exemptions.
interest income
You earn interest on your savings account balance or if you have time deposits at a bank or post office. Interest income above a certain limit is taxable.
“Interest accrued during the year is taxable under the heading ‘Income from other sources.” The taxation of interest depends on its source.
A deduction of up to Rs 10,000 (Section 80 Income Tax Act) is allowed from the total of your Savings Bank accounts for interest income during any financial year. Seniors can avail of a deduction of up to Rs 50,000 under Article 80 TTB in this case.
However, not all interest income is taxable. For example, interest income from public provident funds is tax-free.
Capital gains income
“Profits from the sale of fixed assets such as real estate, stocks, securities, etc. are treated as capital gains.
The tax rate on capital gains differs depending on the property from which it is derived and the holding period. For example: “Capital gains on listed shares are considered long-term (LTCG) if held for more than one year (taxed at 10%) and two years for unlisted shares (20% indexed).
“On the other hand, short-term capital gains are taxed at 15% for listed shares and the plate tax rate for unlisted shares.
“For real estate, the LTCG is taken into account at 20% (with indexation) after two years in prison, while the STCG is imposed at the plating rate.
There is a separate field on ITR forms for capital gains disclosure. “Income from capital gains (whether short-term or long-term) must be reported on Schedule CG of the tax returns.
Gifts and inheritance
Gifts are always welcome, but in some cases, the tax department will want a piece of it.
“Monetary and in-kind donations are taxable unless they fall into the exempt category. Donations should be reported under “Income from Other Sources” and taxed at a flat rate.
Gifts from relatives such as father, mother, brother, sister, and spouse are tax-free, regardless of the amount. Family inheritance is also exempt from the law. However, “beneficiaries are still required to disclose the amount of the tax-exempt gift or inheritance in the ITR “Tax-exempt income” table.
However, gifts received from others are treated as income and tax is payable if the sum of gifts received during the year exceeds Rs 50,000. No tax is payable if the gifts received are below the threshold of Rs 50,000 per year.
“If the total value of cash donations received during the year exceeds Rs 50,000, the full value is taxable. In other words, if two of your friends donate Rs 25,000 each, for a total of Rs 50,000, you don’t have any.” Tax on that, but if one gives a donation of Rs 26,000 and the other gives Rs 25,000, the total is Rs 51,000.
“However, if you received a gift on the occasion of her marriage, the entire gift is tax-free, whether it’s from a close relative, a friend, or anyone else. There is no other occasion where cash donations received from an individual are exempt from tax if they exceed the threshold of Rs 50,000.
Monetary gifts on occasions such as birthdays, anniversaries, etc. are recorded.
prize or lottery
If you have won a prize or lottery, it will be subject to tax. “Lottery prizes and winnings must be reported as income from other sources. In addition, the tax is applied at a flat rate. “Lottery prizes and winnings are taxable at 30%.
Make sure you are using the correct ITR form
If you are an employee and have additional interest income, you can use Form ITR-1 to file your tax return. However, if you have income other than wages and interest, you may need a different form to file your ITR. “For donations, lottery, and capital gains, ITR-2 and 3 forms for natural persons and HUF can be used.
Make sure you submit your return on the correct ITR form and fill in the details according to the correct schedule; otherwise, your declaration may be considered invalid.