Non-reporting Of These Income Sources In ITR To Attract Penalty Of 200%

There are a host of ways to file the ITR and mostly salaried class these days prefer to file their taxes by themselves and hence because of incomplete know-how, tend to miss out on reporting few of the income sources, which otherwise cannot be avoided, as non-mention or omission of these from the ITR can attract a penalty of up to 200% by the income tax department.

Non-reporting Of These Income Sources In ITR To Attract Penalty Of 200%

1. Interest received on bank savings account and fixed deposits: Interest on these financial instruments up to Rs. 10000 is allowed deduction, so even if it is less than this threshold value, it needs to be included in your ITR as part of income from other sources and you need to claim deduction under section 80TTA. And if such income is over Rs. 10,000, then you need to pay tax on it on the excess amount.

Another important point, here is that some of the individuals consider that while TDS is deducted on their FD or bank savings account, they need not provide the same in their ITR. But this is not true as there can be a case when there is a difference in the tax rate at which TDS is being deducted and tax rate that applies on your income, so you need to definitely give in your interest details in respect of such accounts maintained with banking entities.

2. Income earned on the investment of minor child: Notably Rs. 1500 income in the name of each of your minor child in a year is exempt from tax, and any income above this threshold has to be clubbed with the income of the parent who makes a higher earning. So, do not contravene the law and avoid clubbing in case, investment in the name of minor child earn a higher amount more than the exemption limit.

3. Notional income for the second property which is deemed as let out: Income tax laws allows only one house property which is tax exempt and any other property besides this is deemed to be let out and on such property you need to provide notional rent for the purpose of taxation, though in an actual sense you might not be receiving any rent. Notional rent is the rent which the property is expected to provide or the market rate prevailing under a given set of conditions.

Against such notional rent, you can claim full interest for a home loan as well as 30% standard deduction. Nonetheless, it is to be noted that in the previous interim budget announced in February this year, now you can have two self-owned and self-occupied houses instead of earlier provision that allows owning just one house property.

4. Capital gains in case of switching of mutual fund units: Due to a number of reasons, investors can switch their mutual fund investments from one scheme to another. And as now equity mutual funds and equities attract LTCG at the rate of 10%, you need to report the gains on such transfers or switches without defaulting as each of such transactions result in some profit or loss to the investor.

So, do not err on reporting these incomes while filing ITR as else the Income tax department may sent you a notice under Section 148 of Income Tax Act and levy penalty of up to 200% on the unreported income.

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