You have interest income if you have:
- Invested in FDs or bonds
- Purchased Infrastructure Bonds
- A recurring deposit account
- A savings bank account
- Invested in NSCs
The interest earned must be reflected in your tax return as income from other sources. In some cases, TDS will be deducted before you’re paid the interest amount. This, however, doesn’t mean that the income can be ignored.
Here are the common reasons where you must cross-check before handing over your income tax return (as published in ET Wealth on Feb 13, 2012):
- Ignoring income from investment in the name of spouse, kids.
- Ending life insurance policy before 3 years.
- Selling a house bought on loan within five years.
- Not including ornaments in wealth tax.
- Receiving gifts and cash from persons other than blood relatives.
- Not paying wealth tax on second house.
- Both spouses claiming tax benefit on same expenses.
- Withdrawing PF within five years of joining a company.
- Taking benefit of basic exemption limit twice in a year.