1.Saving Bank account and Fixed Deposit interest:
While filing the ITR, the salaried people generally disclose their salary income only or provide copy of form No. 16 to their Chartered Accountant presuming that interest on saving account is fully exempt and as TDS has already been deducted on their fixed deposits interest, there is not need to include them in their ITR again. Though interest on saving account is eligible for tax deduction under Section 80TTA upto Rs. 10,000/- and even if the amount of interest on saving bank account is less than Rs. 10,000/- you are still required to first include it in your income and then claim deduction u/s 80 TTA.
Similarly though the banks deduct tax on fixed deposit interest but the TDS rate and the tax rate applicable in your case may be different, you need to include it in your income and discharge the balance tax liability or claim refund as the case may be. So though the tax is deducted @ 10% but the rate applicable to you may be 5%, 20% or 30%. It is your liability to discharge the differential tax liability. Even in case you are entitled to a refund, you are still required to include the fixed deposit interest in your income. Even for Fixed Deposits which have been renewed on maturity during the year and thus are not reflected in your bank account, you may omit to show the interest on such renewed FD, which is not correct. You should also include the accrued income on NSC purchased in the earlier years as well as accrued interest on fixed deposits of longer tenure.
2.Capital gains in respect of units of mutual funds switched during the year:
Any switching of units from one scheme to another scheme of the same fund house does not get reflected in your bank statement and thus any profit or loss made on such switching may get unreported. The switching may happen due to poor performance of a scheme or due to Systematic Transfer Plan (STP) mandate given to the fund house. The profit/loss on switching of units may be short-term or long-term entailing different tax treatment. Even tax treatment for debt fund is different from equity oriented funds. Ensure to disclose profits/loss on such switching transaction to your Chartered Accountant for proper and correct treatment.
3.Notional rental for deemed to have been let out property:
For a self occupied house the taxable income is taken at nil. However this option is available for one house property only so where you own and occupy more than one house for your self occupation or your family members, you have to treat any one of such houses as self occupied and the other/s are then treated as deemed to have been let out. Such a situation may also arise where you have a house property in your native place reserved for your occupation as and when you visit your native place and thus is deemed to be self occupied by you in addition to the property owned and used for your residence at your work place. In respect of such deemed to have been let out house, you need to offer the notional rental income for tax. Please note notional rent is not the same as nominal rent. The income to be offered for tax is the rent which is normally expected to be received for such property if let out in the open market.
4.Income of minor child:
Income earned by a minor child is to be clubbed with the income of the parent whose income is higher. Parents normally invest money belonging to their minor child received as gift on several occasions. The income/interest earned by the minor on these investments is required to be included in the income of the parent. As income upto Rs. 1500/- per child is exempt per year, the amount in excess of Rs. 1500/- for each of the minor child is to be clubbed in the income of parents. The income receive by minor due to his own skills or efforts is not required to be included.
5.Gifts or other benefits received by you in case you are carrying on business:
This is the age of promotion of business by discounts and gifts not only to the customer but also to the businessman. So a few of you might have been benefited by tangible and valuable gifts from the business associates. Some of you must have enjoyed foreign tours as incentives. Since such items are not reflected in your bank accounts and books of accounts and thus go unreported. Please disclose this to your Chartered Accountant to be fully compliant.