Filing ITR can be a tough task and there are times when taxpayers forget mention certain details, among these details are your income from other sources. There are incomes that you may forget while filing Income Tax Return, but if Income Tax Department traces the income that you have not disclosed then there are chances that you will be penalised.
Things can go out of hand, if the undisclosed income is substantial and tax has not been paid on it. The taxpayer will receive a notice and will have to a heavy penalty. Many taxpayers are under the misconception that if TDS has been deducted on their fixed deposits, they don’t have to pay more tax. TDS is just a part of your tax liability not all of it. It is only 10% of the interest income. If the taxpayer falls in a higher tax slab, he must pay additional tax.
Income from Saving Bank Account
There are some cases where a taxpayer may be confused about his/her interest income from savings bank account, this confusion may arise due to certain relief provided to the taxpayer by the Government of India. As per Section 80TTA, up to Rs 10,000 interest earned on the savings bank account is tax free. Only the interest exceeding Rs 10,000 is liable to tax. This is a very high threshold because at 4% interest, you will earn Rs 10,000 interest only if you let Rs 2.5 lakh untouched in your savings bank account for the relevant financial year. In other words, most small taxpayers will not hit that threshold of exempt income. If you don’t hit the threshold also, in that case also you will have to report this income.
As we know interest income from fixed deposits is fully taxable and the interest income from savings bank account is partially taxable, the taxpayer will have to declare the tax-free income also. In Filing ITR 1 Form there is a different section to mention this exempt income.