To be or not to be was the classic question in Shakespeare’s famous novel Hamlet. However, the question for many tax payers seems to be – ‘To include or not to include’ when it comes to interest income. The ITD has observed that many tax payers did not include their interest income on term deposits since they had submitted forms 15 G/H to banks to get exemption from TDS. However the IT Act specifies that unless your income is exempt from tax u/s 10 it is taxable and must be disclosed in your return of income.
Income Tax Department (ITD) has recently released a notice to ask tax payers to disclose all their interest incomes in their income tax return. This has basically stemmed from the fact that
Hence now you need to collect the information from banks and include your interest income in your ITR reflects only those income amounts on which TDS has been deducted and paid. Moreover income in the form of interest is actually income chargeable to tax and hence needs to be disclosed in the ITR.
Interest income earned on term deposits and savings bank account are missed out by many tax payers when they file their ITR. This notification has made it mandatory to include interest income in the ITR. This comes as a reminder notification also for all those who are yet to file their taxes. Remember 31st March 2016 is the last chance to file taxes for FY 2013-14 and the last date to file taxes without paying penalty for FY 2014-15. Make sure you file taxes by this date and include your interest income in the ITR.