What are taxable income?
All income needs to
be reported, whether exempt from income tax or not. Interest earned
on bank
accounts (savings and FD) are generally not reported due to misconception.
Interest
income,
including accrued interest on NSC is taxable. Money received due to compulsory
acquisition of land is also taxable. Even the rent received from cell phone
tower on roof of your
house is
taxable!Long term Capital gain on stocks and mutual funds is not taxable, but
still needs to be reported under exempt income in ITR2 form. TDS is deducted on
your estimated income at rates specified by the Income Tax Department.However,
your actual income may be
higher
or lower. Therefore, you have to compute your tax liability at the end of the
financial year.
Depending
on your income and TDS deducted,you may have to pay more taxes or you may be
eligible
for refund.In case you have refund due from income tax, do not forget to
mention bank details in your Income Tax Return.Returns after taxes are not good
to beat the inflation, hence there is a negative growth in your money. For
example the actual/average inflation rate is 10% and F D interest after tax is 6%
than your money has negative growth of 4%. Direct tax code has excluded these
tax saving investments. Now, superannuation funds,provident funds and pension
funds are allowedfor deduction.
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