As the date for submitting Income Tax Returns (ITR) draws near, it is important to ensure that you submit your returns promptly. It is important to include all relevant details to finalize the process before July 31st to prevent any penalties or interest fees.
A minor negligence would result in a huge loss. There are many such things that if you ignore while filing the return, then the notice of the Income Tax Department can also come.
While filing returns, many taxpayers often forget to include the interest earned from savings bank accounts in their total income, as they ignore it considering it as a small income. Even if it is small or big, you also need to include this in ITR. Here you can also claim a rebate of ten thousand rupees under section 80TTA of the Income Tax Act, 1961 within one year.
Section 80TTA of the Income Tax Act, 1961 provides a deduction of up to Rs 10,000 on the income earned from interest on savings made in a bank, co-operative society or post office. There is no deduction for interest earned from fixed deposits.
Many parents make investments in the name of their minor children in mutual funds (MFs), Public Provident Funds (c), bank deposits, etc. The income from such investments in the form of interest or dividends or even capital gains is added to their income. But merely investing in their child’s name does not absolve the parents from any arising tax liability.
If you have invested anything in your child’s name and are getting income from it, you will have to register it while filing an income tax return. If the parents make an investment in the child’s name in any of the specific investments under Section 80C such as Equity Linked Savings Scheme (ELSS) or PPF, the parents get the tax benefit and the taxable income gets reduced by the amount invested.
The parents can, however, claim a deduction of up to Rs 1.5 lakh under Section 80C – of their own and their child’s combined. If the parents invest in a taxable investment in the name of the child, they can claim an annual exemption of Rs 1,500 per child under Section 10 (32) of the Income Tax Act, 1961.
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Accrued interest means the income from interest is also your income. In which payment will be made only on maturity. TDS will be taken in this. You have to file all your investments in ITR.
While filing the return, you must also show the return on investment. If you have invested in Public Provident Fund, then the interest earned in it is tax-free. On this type of Investment, one gets the tax exemption at the time of investment, accrual and withdrawal. It offers up to Rs 1.5 lakh deduction on investments made in each financial year under section 80C of the Income-tax Act, 1961. As the interest earned each year is tax-exempted, the accumulated corpus withdrawn upon maturity is also exempt from tax.
While filing ITR the investments abroad has to be shown. Even holdings, foreign funds, and property also have to show while filing ITR.
To avoid Income Tax Notices and penalties, every taxpayer must ensure to include the above-mentioned aspects in their ITR.
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