Non-Disclosure of Exempt Income in Return Can Put You in Trouble

Non-Disclosure of Exempt Income in Return Can Put You in Trouble

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Any person having income during the preceding financial year shall file a return of income before the relevant due dates. A person may earn income which is either chargeable to tax or exempt from tax. In either case, he shall be required to file his return of income.

Yes, you read it right…

You need to file your return of income and DISCLOSE THE EXEMPT INCOME EARNED DURING THE YEAR, provided the taxable total income earned is above the basic exemption limit.

In today’s article, we’ll throw some light on different types of income falling under various heads of income which are exempt from tax. Below are certain categories of exempt incomes under various heads of Income:

 

Heads of Income

 

Exempt income

 

Income from Salary

·       Leave encashment

·       Exemption from House Rent allowance

·       Exemption from Leave Travel Allowance

·       Gratuity / Pension / Non-Monetary Perquisites

Income from House Property ·       Agricultural House Property

·       Property held under Trust for Charitable purpose

Income from Business & Profession ·       Specific businesses enjoying exemptions such Scientific Research Association, News Agency, etc

·       Businesses set up under Specified Special Zones

·       Manufacture of tea, coffee

·       Share of profit received by Partner from a firm

·       Specified Professional Institutions

Capital gains ·       Long term capital gains (on STT paid on shares)

·       Capital gains on Compulsory Acquisition of land

 

 

Income from Other sources

·       Interest of PPF

·       Interest on EPF

·       Withdrawal of PPF / EPF (on maturity)

·       Interest on Tax-free bonds

·       Dividend (only exempt portion)

·       Mediclaim Reimbursement

·       Life Insurance proceeds

·       Agriculture Income

 

The Tax department has specifically asked for exempt income in a specific schedule requiring disclosure of Exempt Income.

Thus the tax departments’ intent is very clear that it will record all information regarding income earned by the assessee including details about income which is exempt from tax. The taxpayer needs to understand that the return of income requires for disclosure of exempt income earned by him during the year and accordingly, the assessee should do the needful.

 

And don’t forget. A true and correct disclosure shall always save you from any unnecessary scrutiny

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