While filing tax returns, apart from your salary, you must declare income from other sources like interest, pension, and profit from selling capital assets. Read this post to know how you can report your income from such sources.
There are five different heads under which you can report the income to the IT department while filing tax returns. These heads are income from salary, house property, capital gains/loss, business and profession, and other sources. For most taxpayers, income from other sources is the most difficult to understand.
Let us have a look at what income from other sources mean and how you can report the same while filing your ITR-
- What is Income from Other Sources?
Any income you earn that does not fall under any of the other four heads is considered as an income from other sources. This includes interest earned from a savings account or FD account, interest from an income tax refund, interest from company deposits, family pension, gifts, gold bonds, and even your winnings from lotteries, gambling, crossword puzzles, and game shows.
Unlike in the past where you were only required to provide an aggregate of your income from other sources while filing ITR, you now need to provide detailed break-up of the income.
- What are the “Income from Other Sources” Options Available on ITR?
The ITR forms now have a drop-down menu where you need to select the other income sources applicable to you and provide detailed information about the same. There are five options-
- Interest income from a savings bank account
- Interest income from deposits like bank deposits, post office deposits, and co-operative society deposits
- Interest earned on income tax refund
- Pension received by the family
- Any other
All the income from sources such as gifts, interest from company deposits, and winnings from gambling, lotteries, etc. should be reported under the “Any other” option.
- Is It Necessary to Report Tax-Free or Tax-Exempt Income?
There are different types of investments, which allow you to earn tax-free income. However, you are still required to provide details about the same when filing ITR. For instance, interest income of up to Rs. 10,000 from a savings account is tax-free. But you still need to provide details about the same under “Income from Other Sources” section.
Even in case of investments like PPF that are tax-exempt, you must provide details of the same under Exempt income (EI) at the time of maturity for recordkeeping.
- How to Report Income from Other Sources?
As mentioned above, you must provide a detailed break-up of all your income from other sources while filing your income tax return. Select the income sources applicable to you from the drop-down menu available on ITR form and provide detailed information about the same.
Add all your income from other sources and mention the total amount in cell B3 in the “Income from Other Sources” head. You also need to provide details of deductions that you might have claimed on the income from other sources. Enter all the other details such as income from salary, house property, etc. before submitting your ITR form.
Never Conceal or Misreport Income from Other Sources
You must disclose all your income from other sources when filing tax returns. Misreporting or concealing any income could result in a tax notice and even penalties and legal complications.