Filing income tax returns: Don't forget these five interest payments
There are just over 10 days left to file your income tax returns. But you should be very careful while filing them. People often miss out on important details in hurry.
For example, you must know that income from interest is taxable. But did you remember these five particular types of interest income that you have to include in your returns?
Filing tax returns: Interest income is taxable too
Interest on safety locker-linked fixed deposits
Customers hiring safety lockers with banks commonly have to open a fixed deposit that's linked to the locker.
The mandated amount is normally less than Rs. 50,000, and the term at least as long as the locker is active.
However, annual interest on such deposits is generally less than Rs. 10,000 and so not taxed at source. This has to be included in returns.
Interest on refund of bond application money
In FY 2015-16, many bonds issued by various institutions were oversubscribed; oversubscription is likely in 2016-17 too.
When this happens, applicants get a partial refund of the application money. However, interest is offered on the overall application money.
Since it generally amounts to a few thousand rupees, or clubbed with the refund or the first interest payment on the bonds, it is frequently overlooked.
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Interest on electricity and phone bills
Telecom and electricity suppliers, government as well as public, charge a security fee at the time of a new connection, which is paid back when the connection is surrendered.
Many offer interest on the amount. It is sometimes credited to the subscriber's account or deducted from the bill at the end of the financial year (reflected in the bill).
This amount is taxable.
Interest on NSC upon maturity
Five-year National Savings Certificates (NSCs) sold at post offices offer cumulative interest which is earned annually but paid on maturity. The annual interest is considered reinvested and so can be claimed as deduction from taxable income under Section 80C, subject to this year's limit of Rs. 1.5L.
However, the interest earned in the last year is paid out, not reinvested. It is taxable.
Interest on Public Provident Fund accounts
Lastly, you shouldn't forget interest earned on Public Provident Fund accounts. It is currently exempt from tax, but it still has to be declared under 'income claimed exempt from tax' while filing returns.
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