Tips and trick Income sources and Tax filing with FAQs.

31 July 2022 was the last date to file ITR of AY 2022-23 for salaried employees and Hindu Undivided Families (HUFs) whose accounts don't need to be audited. Taxpayers who failed to file ITR by 31 July can now file belated income tax returns till 31 December 2022.06.

Heads of Income.

 Salaried individuals pay it in accordance with the income they earn and the tax slab they fall under. However, apart from salary, many people also earn income from a variety of other sources. To facilitate and ease the process of income tax reporting, the Income Tax Department of India has categorised five heads of income, namely:Income tax is the most direct form of tax applicable on Indian citizens

 

• Income from Capital Gains/Loss

• Income from House Property

•  from Business and Profession

• Income from Salary.

Any income that does not fall under these heads is considered as ‘Income From Other Sources’.

In this article, we will uncurtain examples of income from other sources, tax on income from other sources, and income from other sources tax rate, etc.

Income from Other Sources Examples

Form 16A is a certificate which provides details of all the tax deductions made on income other than salary income. Therefore, you need to fill these details in order to claim tax credit while discharging tax liability. This is how the Income from Other sources is shown in ITR 1 Form.

At the time of filing income tax returns, income from other source is listed which includes income apart from salary, capital gains, house property, or business and profession.Thus  below are the income from other sources examples

Income from other sources list

1. Dividend income

2. Income from gambling, betting or winning races, lotteries, etc.

3. Income generated as money or in the form of movable or immovable property which was not considered or inadequate consideration was made in the previous year

4. Interest received on compensation or as enhanced compensation

5. In cases of transfer of a capital asset, if the money is forfeited and does not result in asset transfers, the advance money that is received or the money that is received in negotiation

Other sources of income are also taxable, but this is only applicable if they are not taxable under profits and gains of business or profession. These can include:

 

1. If the employee has contributed funds to the respective employer for payment towards provident funds or ESI, but these funds have not been deposited into the respective accounts

2. Interest received through securities

3. Income that is received from the rental of a plant, machinery, or even furniture, either with the building or without it

Exemption in Income from Other Sources List

As previously noted, several sources of income allow for deductions at the time of computing income tax. However, not all of these can be considered for income tax deductions at the time of computing your taxable income. In this case, tax must mandatorily be paid on these sources of income. These include interest earned or salary received without TDS (tax deducted at source) from outside India, expenditure related to winning of lotteries, races, and through gambling. Even expenses that fall within the purview of Section 40A are not applicable for tax deductions and must compulsorily be paid.

Section 40A includes Section 40A(3) and Section 40A(2), both of which are anti-tax evasion measures. These two sections of the Income Tax Act, 1961, disallow different types of expenditures if they are not in compliance with the guidelines. Both sections are overriding in their scope and if any other allowances or expenditure falls within the purview of other sections of the Income Tax Act, their treatment in terms of the tax liability must only be as per provisions mentioned among these sections.

Taxation of Winnings from Lottery, Game Shows, Puzzles

If you have earned any money from winning the lottery, puzzle, or any online/TV game show, etc., the income is liable for income tax under ‘income from other sources’. The applicable income from other sources tax rate will be 30%. After adding cess, the tax on income from other sources becomes 31.2%.

Expenses Allowed to be Deducted from Certain Income Sources

Just as self-employed businesses and freelancers can deduct some expenses from their income, taxpayers receiving income from other sources can claim the deductions for the expenses. These deductions are mentioned below.

• Expenses (not capital expenditures) like repairs, insurance premiums, and depreciation on plant, machinery, fixtures and buildings are deducted from the rental income generated by letting out of plants and machines, furniture and fixtures, ware house and buildings. Rental income from the plant and machinery is taxable under income from other sources. The expenses in respect of such plant and machinery are allowed for deduction.

• A standard deduction is allowed for the family pension, i.e. the lowest deduction of ₹15,000. One-third of such income is available in case of income in the nature of family pension. It is paid monthly to the family members of the deceased employee.

• If interest is accrued on compensation or additional compensation is received, 50% of the interest can be deducted. Subject to Section 57(iii), a deduction is allowed for any other expenses (other than capital expenditures) that have been spent solely and entirely to make or earn such income.

• If money or commissions have been paid to realise dividends, these costs may be deducted from dividend income that is taxed as income from other sources.Remuneration or commission for realising dividend or interest on securities.
  

Conclusion.

Taxation often eats away a significant portion of an individual’s earnings. As a result, investors prefer investments which ensure tax saving through deductions. In recent times, Unit-Linked Investment Plans (ULIPs) , ELSS ,pension funds , Life Insurace mediclaim ,post office saving schemes and so on have emerged as a top choice among investors looking to supplement their income from other sources. 

The top 10 Frequently Asked Questions (FAQs) related to the filing of the income tax return for the Assessment Year 2022–2023 (Financial Year 2021-22) have been made public by the Income Tax department. The last day to file returns is July 31, 2022.

FAQs on top ten clarifications sought by the Taxpayers while filing their Income-tax returns:

Question 1:

Self-assessment tax paid but not reflected in prefilled details.

Resolution:

As per the normal process, it takes 3 to 4 days for different banks to provide information to the department. Post that, it gets prefilled in the Tax-returns/Pre-filled JSON. A taxpayer may opt to wait for the required time period for auto-reflecting details of the Taxes paid in ITR.

Alternatively, in such cases where a taxpayer has already filled in additional details over and above the pre-filled details, such payment details can be entered manually after clicking on the ‘Add Details' link for Advance Tax and Self-Assessment Tax Payment details under Schedule “Taxes Paid”.

Question 2:

How to pre-validate the bank account and select a bank for a refund.

Resolution:

The taxpayer needs to add a bank account in which a refund is required as per the below steps.

Go to Profile>> My Bank Account>> Add Bank Account>> Provide correct bank details & validate.

The request will be sent to the respective bank or NPCI for validation. Once validation is successful, the Taxpayer can nominate the bank account for a refund.

Note: While filing ITR, if the user has a bank account with ‘Validation in progress status, the same can be nominated for refund and ITR can be filed without waiting for confirmation. However, the refund, if any, will be credited only after validation is done by the bank.

(To know more refer to My Bank Account User Manual | Income Tax Department)

Question 3:

While trying to file the ITR-7 claiming exemption under the below sub-sections, I am not able to find the relevant dropdown in ITR 7 utility. What should I do in this regard?

Resolution:

The persons claiming exemptions in any of the above-mentioned sub-sections are not required to file ITR-7, They may use other ITR types as appropriate to file the return.

Question 4:

How to e-verify through net banking?

Resolution:

To e-verify through net banking, the user needs to login into an e-filing account net banking account, below are the steps:

• Click on “Net Banking” link under “Other ways to access your account” on the “Login” page.

• Select the Bank and login to net banking website using your net banking credentials.

• Locate the Income tax e-filing tab at the bank website.

(Note: This differs from bank to bank.)

• Click on the “Login to Income Tax e-filing” link at the bank website.

• You will be redirected straight to the e-filing dashboard.

• Click on “e-verify return” link under e-file> Income-tax returns.

• Click on the “e-verify” button against the return to be e-verified.

• You will be navigated to the “success” page and your return will be successfully verified

(To know more refer to: How to e-Verify User Manual | Income Tax Department)

Question 5:

What difference between income as shown in AIS and 26AS?

Resolution:

Income reflected in AIS and 26AS is based on information received from different sources and tax compliance made by different stakeholders. These are made available to the Taxpayer for reference purposes. The taxpayer should check his book of records and provide information in the return as per the information available to him.

If there is variation between the TDS/TCS or tax payments as provided in Form26AS and the TDS/TCS or tax payments provided in AIS, the Taxpayer may rely on the TDS/Tax payment information provided in 26AS for the purpose of filing tax return and for computing Pre-paid Taxes.

Question 6:

How to register for legal heir/documents required?

Resolution:

Steps to Register as a legal heir:

Log in to the e-Filing Portal >> Authorized Partners >> Register as Representative Assessee>> Let's get Started>>Create New Request >>Choose the Category of assessee ‘Deceased (Legal heir)' >>enter the required details >>Upload mandatory attachments and click Continue.

Document to be Uploaded:

• Copy of PAN of the deceased

• Copy of legal heir proof as per the norms (any of below)

− The legal heir certificate is issued by a court of law.

− The legal heir certificate is issued by the local revenue authorities.

− The surviving family members' certificate is issued by the local revenue authorities.

− The registered will.

− The family pension certificate issued by the State/Central government

− Letter issued by the banking or financial institution on their letterhead with seal and signature mentioning the particulars of nominee or joint account holder to the account of the deceased at the time of the

demise.

• Copy of death certificate issued by Municipal Authority or Corporation or Registrar of Deaths

• Copy of Order passed in the name of the deceased, if applicable

• Copy of Letter of Indemnity (optional)

“In case document is any Vernacular language please provide Hindi / English translation of the document duly notarized, along with copy of the original document”

Question 7:

How to reset the password without filing/Aadhar OTP?

Resolution:

To reset the password without e-filing OTP (if registered mobile has changed)/Aadhaar OTP (if Mobile is not linked to Aadhaar or if Aadhaar is not linked to PAN), the user can reset the password using a valid DSC or can log in indirectly through Internet Banking into E-filing account. The DSC should be linked to the PAN of the Taxpayer and the user can reset the password even if DSC is not registered on the portal.

(To know more refer to Reset Your Password User Manual | Income Tax Department)

In case all these options do not work or are not available, a taxpayer can send a request to efilingwebmanager@incometax.gov.in by attaching and sharing the following details with the request email:

• Scanned copy of PAN of the Taxpayer; and

• Scanned PDF copy of the identity proof (such as passport /Voter Identity card/Driving License /Aadhaar card /

Bank passbook with Photo); and

• Scanned PDF copy of Address proof (such as passport /Voter Identity card/Driving License /Aadhaar card / Bank

passbook with Photo); and

• Letter in writing, requesting to reset the password by giving valid reasons

Note 1: Kindly attach the documents in ZIP (.zip) format only, otherwise your request will not be processed.

Note 2: All the documents are to be self-attested by the user.

Note 3: The request for password reset must originate from the email id of the PAN holder as registered in the e-filing Profile or from the existing mail of the Taxpayer.

Note 4: A minimum of 1 working day may be required for processing such requests.

Once the documents are validated, the reset password link will be shared through the Email id from which the request has been received.

Question 8:

How to claim some deductions like 80TTA when Tab is not visible?

Resolution:

In ITR 1 & 4, Deduction u/s 80TTA or other deductions can be entered in the Total deductions tab (click view all deductions) and in other ITRs Deductions can be entered in Schedule VI-A under Part-B, Part-C & Part CA, and D.

Question 9:

How to file returns through an offline utility?

Resolution:

Complete details are provided in User Manual to help Taxpayers in filing the Income-tax returns through offline Utility. Refer the following link for detailed instructions:

Question 10:

How to opt/Change tax regimes?

Response:

In case, Taxpayer is filing ITR-3 or ITR-4

Opting In:

(i) Taxpayer had already opted for New Tax Regime last year by filing Form 10-IE or while filing ITR as applicable for A.Y. 2021-22 and wishes to continue the same for A.Y. 2022-23 also. In such case, the Taxpayer is NOT required to file the 10-IE Form again this year. A taxpayer can mention last year filed Form 10-IE Ack. No. and Date of filing for filing return in A.Y. 2022-23

(ii) If Taxpayer is ‘Opting In' 115BAC Tax Regime for the first time in A.Y. 2022-23, then Taxpayer having a business income is required to file Form 10-IE and Ack. No. and the Date of filing needs to be mentioned by selecting the ‘Opting in Now' option in ITR-3/4.

Changing tax regime:

In case the Taxpayer had already opted New Tax Regime last year and filed Form 10-IE for A.Y. 2021-22 and the Taxpayer wishes to opt out from the new tax regime for A.Y. 2022-23, he is required to file Form 10-IE this year for opting out of the New Regime and mention the filed Form 10-IE Ack. No. and Date of filing in ITR-3/4.

(Please note in case the Taxpayer is filing a return in ITR-1 and 2 then filing of Form 10-IE is not required for claiming 115BAC. A taxpayer can select the applicable option within the ITR and file within the due date.)