The taxpayers often ignore various incomes while filing their income tax returns. Such other incomes fall under the head ‘Income From Other Sources’. The taxpayers sometimes ignore those income unknowingly their taxability or sometimes knowingly hide these incomes to reduce their tax liabiities.
The taxpayer must know the taxability of all incomes derived by him before taking it into consideration or the consequences of incorrect treatment of such incomes.
There are four main heads of income under which a taxpayer need to file the ITR which are Income under the head salaries, income under the head house property, income under the head business and profession and income under the head capital gains.
However there are many other incomes which do not fall under either of the above mentioned heads. A separate head has been made for such uncategorized incomes call income from other sources.The income derived under the head other sources is ignored number of times by the taxpayers. If a taxpayer doesnt disclose his income under the head other sources and the TDS has been deducted on such income by the payer has been shown in the 26AS of the taxpayer, he will likely to get the notice from the income tax department for the mismatch in the return and the 26AS.
Have a look at the incomes which are taxable under the head income from other sources;
1. Gift income ; Any amount received in excess of Rs. 50,000 without adequate consideration is an income under the head other sources. (Gift received from relatives within the meaning of I-T laws are exempt)
2. Divident income ; Dividend received from a domestic company in excess of rs. 10 lakhs is taxable at the rate of 10% under the head income from other sources, however dividends received from a foriegn company are fully taxable.
3. Interest income ; Any income received as an interest from the investment made in securities like bonds, debentures etc. are taxable under the head income from other sources.
4. Pension income ; Any amount of pension received by legal heirs of a deceased is taxable after allowing an exemption of lower of 33.33% or 15,000.
5. Lottery income ; Income earned by way of lottery, horce races, cards, crossword puzzles, betting or game shows are taxable at the rate of 30% under the head income from other sources.
6. Other income ; Other incomes falling under the category of income from other sources includes insurance commissions, Interest on loans, Interest of Fixed Deposits and recurring deposits, interest on NSC, Post office savings scheme, rent from land etc.
Now we will discuss the conseqeunces of ignoring the income under the head other sources
If any mismatch in the Income Tax Return and 26AS is found it may result in incorrect IT return, and it will attract the income tax notice. If the taxpayer has claimed the tds which was deducted on the interest income received by him, but did not disclose the interest as his income in the income tax return, the A.O will consider the return as defective and will issue a defective return notice u/s 139(9) to the assessee. But in case the tax payer did not close TDS as well as did not disclose interest income , the A.O will send an enquiry before assessment notice u/s 143(2) and scruitiny assessment notice u/s 143(1) and the tax liability along with applicable interest will have to be paid according to the I-T provisions.
Apart from applicable interest the A.O can impose penalty u/s 270A which will be between 50% to 200% of the amount of tax, on misreported income.