ITR: 5 common bank transactions mistakes to avoid in tax return
Income Tax Return: The due date for filing of income tax return of AY 2020-21 for individual taxpayers is 31st December 2020. One must file ITR on time with due care. However, while filing your income tax return, you should take utmost care with the banking transactions. If you make a mistake you could end up with a tax notice from the income tax department asking you to explain the discrepancy and pay tax, if any.
One must know what to show, how to show, where to show and what not to show in ITR. Generally, these 5 income which are received in bank are not shown correctly in Income Tax Return.
1. Interest on Income Tax Refund – Always check what amount was due for Income tax refund and how much IT refund is received in bank account. If the difference arises, that’s the interest portion due to delay in refund. That interest is taxable in Income From Other Sources.
2. Dividend Income – For FY 2019-20, Dividend Income is exempt till Rs 10 lakh. People never show exempt income. Although dividend is exempt but it is important to show the exempt income in Income Tax Return.
3. FD Interest – If interest exceeds Rs 40,000 (Rs 50,000 in case of a senior citizen) Bank credit interest on fixed deposits after deducting TDS (tax Deducted at Source). For example, BabaTax’s bank interest for a year is Rs 1,00,000. Bank deducted TDS of Rs 10,000 and credited the bank account with Rs 90,000. Babatax needs to show Rs 1,00,000 as bank interest in its ITR, not Rs 90,000.
4. Gas Subsidy – Many a times people show Gas Subsidy received in Bank Account as Income which is totally wrong. It is not any income, its a refund of what we paid. It is not shown in ITR.
5. Lottery, Game Shows Income – Now a days, many Online platform like MPL, Dream 11, my11circle, Rummy etc organize online games where income is received in bank. If the prize money exceeds Rs 10,000, amount is credited after flat deduction of TDS @30% which after adding cess amounts to 31.2%. TDS can be checked from Form 26AS. For example, BabaTax won Rs 2,00,000 in Dream 11. Dream 11 deducted TDS @31.2% of Rs 62,400 and made payment in account with Rs 1,37,600. Babatax needs to show Rs 2,00,000 as Game show Income in its ITR not Rs 1,37,600.
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The author of above article is Riya Thawani.
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