Earning Interest income? Increase your earning by 10% by filing ITR this year

There are a large number of people who are dependent upon the interest income for their bread and butter, this number especially includes the pensioners, poor, and retired officers. During our experience with them, we have found one issue which has cost 10% of their total interest income to each and every person.

Let us understand this problem and the solution for it.
 

The General Problem

Let us assume a situation in order to understand it better. Mr. Ram is a salesman earning a total remuneration of Rs.20,000/-. He also earns interest on fixed deposits amount to Rs. 90,000/- in a year. He also does contribute to PF, medical etc, which total deduction amounts to Rs. 35,000/-.

During the year, Mr. Ram noticed that though he earned Rs. 90,000 in FD interest, but the bank paid him just Rs. 81,000/-. Rs. 9000 has been deducted as TDS by the bank, which is exactly 10% of the total interest.

Mr. Ram has no idea about what TDS is but they knew one thing that it is some kind of tax which goes to the government. If you are one of them and wants to know how to get this money back, then read further.

TDS – Is nothing but Income Tax

TDS means tax deducted at source. In simple words, it is known as advance income tax paid to the government. Yes, you read it right! Whenever your TDS is deducted on interest income, it means that you paid the government an advance income tax to the government. The most important thing to understand about TDS is that you can get it back; unlike the service tax (now GST) you pays on restaurant etc.

But, is it simple to get this tax back? If yes, then how? Don’t worry we will tell just read further.

 

How to get this tax (TDS) back?

So, now you must have understood the title of this article. When you get this lost amount back, you basically increase your income by 10% because you have already written it off. But how to get it back?

To get this amount back, you need to file your income tax return. When you file your income tax return (ITR), you basically submit your income calculation and tax calculation to the government.

If after total calculation, suppose you total payable tax comes to zero, but you have paid some tax (in the form of TDS) to the government, then in that case, total TDS deducted shall be refunded to you in your bank account.

Let us understand this on our example, which we took in the beginning.
 

Total tax calculation

Here is the total tax calculation of Mr. Ram.

If you have gone through the above calculation, you will understand that Mr. Ram has to pay nothing to the government, but he still paid Rs.9,000/- in the form of TDS. So, if he has to get his money back, he needs to submit the calculation to the government. And how would he send his calculation to the government? He can by filing the Income Tax Return (ITR).
 

How to file the Income Tax return (ITR)

Filing of Income Tax Return (ITR) sometimes, could get a little complex, but in this step, we will explain you the simplest possible way. To file the income tax return, please follow the procedure;

• Log in to the Income Tax Website: The first step is to log in into the incometax-efiling website. Once you are through, simply click on the income tax return, and prepare it online.
• Observe: Once you start preparing your income tax return online, you will find most of your details already prefilled. Check all the details including the total TDS already deducted. Correct them in case you find them wrong.

• Fill all your required details: After checking the prefilled details, put all the required information like salary income, deductions, account number, IFSC code etc.
• Verify your details: Verify each and every details of yours before submitting the ITR.
• Submit: Once you are satisfied that everything is correct, just click on the submit button and its done.
• Mistake: In case you wrongly filed the income tax return, or filled any wrong data by mistake, don’t panic. Just revise your return following the same procedure.
   

Multiple Interest Income

Sometimes, it happens that person may be earning multiple interest incomes and on all the interest, TDS has been deducted. So, to keep a track on your TDS paid by you, just open 26AS statement by filing into Income Tax e-filing website.
 

TDS limit for Senior citizen

If you are senior citizen, then you don’t have to worry about TDS up to Rs.50,000/- as the government has revised the TDS limit for senior citizen up to Rs.50,000/-.
 

Conclusion

Taxation can be little confusing and so in order to file your income tax return properly, it is advised to consult a professional. In case you want to save tax, or need any advice, contact our experts today.