Why 9 types of lifestyle expenses must be reported in income tax returns

Taxpayers must report their lifestyle expenses in their annual income tax return. Tax officials want to know how much you spent throughout the year and whether those expenses are consistent with your income.

To assess this, taxpayers must provide information on nine types of lifestyle-related expenses in their returns.

Taxpayers must submit details of lifestyle-related expenses using Return IT-11GA (2023). Even if another member of the family pays the household expenses, the taxpayer must mention this in the remarks column of the form.

Taxpayers primarily need to provide details of household grocery and other daily expenses. They must report the total expenditure for the entire year rather than provide a monthly figure.

This section covers rent and housing-related expenses. Taxpayers must report their monthly rent as well as the amount they spent on maintaining their homes. For example, if someone earns a relatively low salary but lives in an affluent area, the tax authorities may identify the discrepancy. This information helps determine whether the taxpayer’s housing expenses are consistent with their salary or income.

If you own a private car, motorcycle or any other vehicle, you must report how much you spent on using and maintaining it. This includes fuel costs, maintenance expenses, various fees and charges, and the driver’s salary. Tax officials use this information to assess whether your income supports your vehicle-related expenses.

Taxpayers pay electricity, gas, water, telephone, mobile phone and internet bills every month. They should keep records of these expenses because they must report them when filing their annual tax returns.

Suppose your income is low but you send your children to expensive, well-known schools. If you report this in your tax return, tax officials may naturally ask how you afford your children’s education. This is why taxpayers must report how much they spend on their children’s school and college tuition fees. They may also spend significant amounts on coaching. Therefore, taxpayers should keep records of all education-related expenses incurred by family members.

Taxpayers must also report their expenses on domestic and overseas travel. Many people now use credit cards for travelling within the country and abroad, and these expenses must also be reported.

People receive bonuses in addition to their salaries and allowances during Eid, Puja and other festivals. They may spend money on their spouses, children and relatives and make special grocery and shopping purchases. They may also give cash to others. Taxpayers must include these expenses in their returns.

Taxpayers have various expenses throughout the year on which tax is deducted at source. They should keep records of these deductions. Tax is also deducted from the profits earned on savings certificates. In addition, taxpayers must report the amount of income tax and surcharge they paid in the previous year based on their tax return.

People often take loans from banks, financial institutions and other sources for various needs. They have to pay interest on these loans. Taxpayers must also report how much they spent on loan interest.