The last date of filing tax return has been extended from 31st July to 5th August for the year Assessment Year 2016-17 (Financial Year 2015-16). Taxpayers who have still not filed tax return got the breather and must utilise this extension to file tax return as soon as possible.
Before filing your tax return do recheck whether you have considered the below mentioned interest incomes else you could get tax notice in the near future. Even you have filed your income tax return but forgot to disclose any income you can revise your tax return before 31st March, 2018, provided your tax assessment has not been done.
Interest Incomes not to miss while filing tax return
1 Interest on Public Provident Fund
Being one of the best tax-free investment schemes, many of us must be holding Public Provident Fund Account for our retirement planning. PPF not only provides tax benefit at the time of contribution but also on accumulation as well as on withdrawal stage. But investing in PPF is not enough to get tax deduction one must disclose the interest income credited in his/her account at the year-end in the tax return under the head “Income Exempt from Tax”.
2 Interest on Application Money
Last year almost all the tax-free bonds were heavily oversubscribed due to the high interest rate. Massive oversubscription leads to partial allotment and remaining money gets refunded after the subscription is done. The time company takes to refund the amount for non-subscription (for non-ASBA Applicants) will be awarded through the interest. However, the interest amount is small and is often overlooked. Further, if the interest amount is summed-up with the refund money or with the first payment of interest on the bonds, than chances of not noticing it all are high. So it becomes necessary to disclose it in ITR to avoid any tax notices.
3 Interest on National Savings Certificate in Last Year
National Savings Certificate is an eligible investment scheme under section 80C and comes with tenure of 5 years (10 years NSC have been discontinued) bearing interest rate of 8.10% p.a. (compounded half-yearly). Further the interest accrued on NSC is not paid out and reinvested which makes the interest income tax deductible u/s 80C. But do remember that the interest income from National Savings Certificate is tax deductible only up to the year it is reinvested i.e. up to 4 years. The interest income for the last year (i.e. 5th year) does not get reinvested and thus becomes taxable and should be added in the taxable income of the assessee.
Please note that NSC interest income is not exempt from tax that means you will have to first add NSC yearly interest income into your taxable income and then claim deduction under section 80C up to the threshold limit of section 80C up to 4 years.
4 Interest on Income Tax Refund
Considering the widen scope TDS (pay as you earn) and non-disclosing of investments at the beginning of the year to the employer, most of the salaried taxpayer ends up paying higher tax amount than they are actually required. Due to over tax deduction while calculating the tax liability at the time of filing ITR many of the taxpayers gets tax refund amount. Tax department pays certain amount of interest on this refund amount which is clubbed with the refund amount. The interest amount paid is calculated at 6% p.a. from the first day of assessment year (i.e. 1st April) to the date of refund granted. In some cases this interest amount is big while in some cases the amount is small but no matter how much interest amount you get, it is all taxable under the head income from other sources.
Do note that only the interest part of the total refund amount is taxable and not all. To calculate the interest part you just have to deduct the refund amount shown in the last ITR from the amount you received in your bank account.
5 Interest on Fixed Deposit against Locker
Keeping your gold and silver ornaments at your home is long gone. With the banks providing locker facility of keeping your valuables, who wouldn’t go with it? But most of the banks particular public sector banks do not provide locker only on yearly charge basis, they do ask customers to open a fixed deposit account with them which is to be kept till customer holds locker. The minimum fixed deposit amount differs from bank to bank but it is not normally large amount- mostly less than Rs.50,000.
The interest from fixed deposit may be used to pay the yearly rent of the locker or gets credited to the savings account of the customer with the bank or reinvested with FD itself, if FD is cumulative. Since the FD amount is small, banks do not deduct TDS on the interest earned as the amount does not crosses the TDS threshold limit of Rs.10,000 per year.
Sometime bank directly deduct locker rent from the interest amount and credit only the remaining amount in the account. Thus customer does not get the clear amount of interest earned and discloses only the amount as shown in the passbook. It is to be noted that full interest is taxable even it is used against vault rent.