Estimating the Income

The next step involves calculating the amount of income earned by an investor. An investor makes many investments and also earns income from these investments. So, again in this case, the investor has earned the income but not yet received it. Here, the income earned needs to be calculated for the given financial year. It is sometimes made easy for the investor as the company issuing the income mentions the amount earned in a statement.

For example – if one invests in a bank fixed deposit starting from the 1st of any month after March but will only receive the income after a year, (s)he will still be taxed on the income. Here, the investor will be taxed on the income earned but not received yet in the forthcoming tax session, that is coming March. If this type of investment is eligible for tax deductions at source, then the concerned bank will do so before giving the amount to the investor. The advantage here is that the bank will issue an interest certificate. So, the investor can be hassle-free when it comes to this area. This certificate will contain all details of income received and also tax deductions at source.