Filing Returns For Different Sources Of Income

KEY POINTS:

• Income tax returns have to be filed in one form irrespective of the number of sources/heads of income.
• Assessees are required to file their returns using the forms ITR-2 and ITR-4 depending on the source of their income, i.e. whether it is Income from Capital Gains, Income from Salaries, Income from House Property and Other Sources, or Income from Business/Profession.
• World income, that is to say income earned whether in India or outside India, is taxable in the hands of a person who is resident in India. Non-Resident Indians are not required to file their return of income unless they have taxable income in India.

Q 1) I am a government employee and I also deal in shares. Which form do I have to fill when submitting my Income Tax (IT) returns? Do I have to file different returns for each income separately or I have to file returns for the combined income?

- Shirish M, Mumbai

Reply – 

Income tax returns have to be filed in one form irrespective of the number of sources/heads of income. Thus, though you are a government employee and also earn income from dealing in shares, you need to file only one form of return of income.

As your income is from Salaries and from Capital Gains, you will have to file your income tax returns in Form ITR-2. However, if you are dealing in derivatives and earn Income from Business, you will have to file your returns in Form ITR-4.

The following is the category of persons who are required to file their returns using the forms ITR-2 and ITR-4 respectively:

ITR-2: Individuals or HUF whose total income includes Income from Capital Gains besides Income from Salaries, Income from House Property and Other Sources, but does not include Income from Business/Profession.

ITR-4: Individuals or HUF deriving income from proprietary business/profession.

Q 2) I am 35 years old. I have never filed my income tax returns and have not obtained a PAN card till date. I got a job in Singapore in October 2010, and I resigned in December 2012. In the mean time, I have transferred money regularly to my NRE Savings Bank a/c. Please advise me as to how to start filing my return of income and ascertain/pay tax liability.

- Dhawal Purohit

Reply –

Normally world income, that is to say income earned whether in India or outside India, is taxable in the hands of a person who is resident in India. A person is a resident in India if he/she is physically present in India for a period of 182 days or more.

Alternatively, if a person has been in India for a period of 60 days or more in a year and also for a period of 365 days or more in the immediately preceding four previous years, is also a resident India unless he/she is falling in the exception accorded to a citizen of India or a person of Indian origin. Thus, each year, an individual has to ascertain the residential status and determine the taxability of his/her income. As you were out of India for the financial year April 1, 2011 to March 31, 2012, you were a non-resident and are not required to file your return of income for the said period unless you have taxable income in India.

However, as you have returned to India in December 2012, you will have to ascertain the taxability of your income and file your return of income for the current financial year accordingly. You may consult a Chartered Accountant or a Tax Practitioner or a Tax Return Preparer to assist you in filing your return of income in accordance with the provisions of the Income Tax Act, 1961. In the meantime, you could apply for a Permanent Account Number (PAN) Card.