 "Declare other income to employer")
Did you know that you can declare your other income to your employer? And, that your employer can deduct taxes on your behalf? This makes it convenient while filing taxes as you would have paid taxes by way of TDS, or tax deducted at source, which will be reflected in your Form 16. You also don’t have to worry about paying advance tax or tax on other income at the last minute, while filing the returns.
Other income can be any kind of income other than salary. For example, capital gains from house property or trading in shares, income from debt investments, rental income, interest income from bank fixed deposits or savings bank accounts, earnings from lottery, income from part-time business/ activities, etc. You can declare most of these incomes and let your employer add these to your salary income and deduct TDS accordingly. “Technically, an employer cannot stop you from declaring your other income, because the law permits it. But the fact is, most employers are unwilling to do it because it is additional work for them,” says Homi Mistry, partner, Deloitte Haskins & Sells LLP.
ALSO READ: Snip that tax outgo
The biggest advantage of declaring other income to your employer is that it will reflect in your Form 16, under the head 'Any other income reported by the employee’. Hence, it is convenient while filing taxes. Another advantage is that you don't have to pay advance tax. This is important because in case of advance tax, 90 per cent of it should be paid by
March 31. In some cases, if you don't pay advance tax according to the instalments, you might have to pay interest on the tax. The instalments are due on or before September 15, December 15, and March 15. The interest is approximately one per cent a month for the period of default.
“Employees usually declare their life insurance premium, contribution to PPF (Public Provident Fund), home loan interest, health insurance premium, and even certain donations. But they don’t usually declare their other income to their employer,” says Mistry.
While employers are reluctant to accept the declaration of other income because of the additional work involved, most salaried employees are also reluctant to disclose the same. “A lot of salaried employees are under the impression that interest income earned from FDs (fixed deposits) are not taxable if bank has deducted TDS. However, banks typically deduct only 10 per cent TDS and if you fall in a higher tax bracket, you will have to pay tax while filing tax returns. If you declare it your employer it will show in your Form 16 and it will be easier while filing returns,” says Arvind Rao, a Mumbai-based chartered accountant.
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The only restriction while declaring other income to your employer is that you cannot declare capital losses rising from the sale of shares or investment as well as losses from part-time businesses. The only loss your employer can account for is loss on account of interest paid on the home loan in relation to one’s house property.
Other income can be any kind of income other than salary. For example, capital gains from house property or trading in shares, income from debt investments, rental income, interest income from bank fixed deposits or savings bank accounts, earnings from lottery, income from part-time business/ activities, etc. You can declare most of these incomes and let your employer add these to your salary income and deduct TDS accordingly. “Technically, an employer cannot stop you from declaring your other income, because the law permits it. But the fact is, most employers are unwilling to do it because it is additional work for them,” says Homi Mistry, partner, Deloitte Haskins & Sells LLP.
ALSO READ: Snip that tax outgo
The biggest advantage of declaring other income to your employer is that it will reflect in your Form 16, under the head 'Any other income reported by the employee’. Hence, it is convenient while filing taxes. Another advantage is that you don't have to pay advance tax. This is important because in case of advance tax, 90 per cent of it should be paid by
March 31. In some cases, if you don't pay advance tax according to the instalments, you might have to pay interest on the tax. The instalments are due on or before September 15, December 15, and March 15. The interest is approximately one per cent a month for the period of default.
“Employees usually declare their life insurance premium, contribution to PPF (Public Provident Fund), home loan interest, health insurance premium, and even certain donations. But they don’t usually declare their other income to their employer,” says Mistry.
While employers are reluctant to accept the declaration of other income because of the additional work involved, most salaried employees are also reluctant to disclose the same. “A lot of salaried employees are under the impression that interest income earned from FDs (fixed deposits) are not taxable if bank has deducted TDS. However, banks typically deduct only 10 per cent TDS and if you fall in a higher tax bracket, you will have to pay tax while filing tax returns. If you declare it your employer it will show in your Form 16 and it will be easier while filing returns,” says Arvind Rao, a Mumbai-based chartered accountant.
ALSO READ: Are you creating black money unwittingly?
The only restriction while declaring other income to your employer is that you cannot declare capital losses rising from the sale of shares or investment as well as losses from part-time businesses. The only loss your employer can account for is loss on account of interest paid on the home loan in relation to one’s house property.