MANDATORY DISCLOSURES WHILE FILING INCOME TAX RETURN

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At the time of filing your income tax return, you must fill in some mandatory details If you fail to do so your return will be defective, notice could be sent. The due date for filing of IT Return for FY ( 2020-21) as of now is Sep 30, 2021. The key aspect taxpayers need to remember while filing their returns is to provide all mandatory disclosures. Failure to do so can result In the tax return being declared defective. The IT Department could even send a notice to taxpayers.

If you do not want to get your return defective and get a notice from IT Department, then you must read this blog.

Mandatory Disclosures

1.Bank Accounts.

• The taxpayer needs to report all the bank accounts he holds within the country. One needs to include even those bank accounts that are held in joint name. Mention details like bank name, account number and, IFSC CODE.

• Those who have multiple bank accounts need to select one for the purposes of the refund.

• The dormant bank account which has been non-operational for the past three years need not be mentioned.

• Though the IT act specifically provides for penal provisions for non-disclosure of these details, the IT Dept could treat the return as defective under sec 139(9).

2.Unlisted equity shares.

• The taxpayer must also report details of investments in unlisted equity shares. Investments in shares of unlisted foreign companies also need to be reported in this schedule even if it has been reported under foreign asset schedule
• Provide details like name, type of company, its PAN, opening balance, share acquired and transferred, closing balance.
• If it is not disclosed IT DEPT may treat it as a defect in the ITR and ask the assessee to revise his return
• Details of unlisted equity shares held by the assessee anytime during year can be provided in ITR 2,3,5,6

3.Directorship held in companies

• The ITR Forms ask whether a person is a director in a company. The taxpayer needs to provide the name TYPE and PAN of the company, DIN and indicate whether shares of the company are listed on a Registered stock exchange

• If a person is a director in a company he cannot file ITR 1 OR ITR 4

• He has to mandatorily file ITR 2 or ITR3

• If The assessee files his return in the wrong ITR form it might be treated as a defective return. Furthermore, if the assessee fails to rectify, the return may become invalid.

• The IT Dept could treat this as if the assessee has failed to file his return.

04.Assets and Liabilities

• Details of specified movable and immovable property have to be provided in schedule AL (Assets & Liabilities). Corresponding Liabilities also need to be disclosed.

• However, not all taxpayers have to disclose their assets and liabilities. The requirement to furnish such information applies only to those taxpayers who have net taxable income after deductions exceeding 50 lacs in a financial year.

• Details of such assets can be provided in Schedule AL in case taxpayers( Individual/HUF)  file their tax returns in ITR 2 & ITR 3.

• Those who file their returns in ITR 1 & ITR 4 forms are outside the scope of this requirement.

• If a taxpayer is a partner of a firm or a member of an association of persons(AOP) or Body of Individuals(BOI), then the particulars of interest in such firm, AOP, BOI needs to be disclosed along with PAN of the entity.

05.Disclosure of Foreign Asset and income

• Ordinarily resident individuals have to furnish details of their assets held outside India (both as owner and beneficiary) in line with specified disclosure guidelines.

• Reporting is required even if the asset was held for a single day during the relevant accounting period.
  
  
• Undisclosed foreign income or asset is taxed at the rate of 30% plus penalty. The latter is equal to three times the tax payable on undisclosed income or the value of the undisclosed assets.

• In addition to tax and penalty on the concealed income, an additional penalty of 10 lakh could be levied for failure to file ITR or disclose such foreign assets or income in ITR.

• Willful attempts to evade taxes by not furnishing a tax return or not disclosing foreign income and assets in ITR can lead to Persecution.

   Meaning of foreign assets?

• Foreign accounts, which include foreign depository accounts, foreign custodial accounts, foreign equity and debt interest, foreign cash value insurance or annuity value contract needs to be disclosed.
• Financial interest in equity interest.
• Immovable property.
• Any other capital asset.
• Accounts in which taxpayers have signing authority
• Details of trusts, created under laws of a foreign country in which taxpayer is a trustee, beneficiary or settler.
• Details of any other income derived from any source of India and income under head business or profession.

So, friends, I hope you all are able to get along with this article.

If you have any queries you can any time reach to us.

Stay tuned to our blog and website for more relevant content and articles. Soon will continue the Series on cash transactions.

Thanks for reading!!!

Nani Balu

TAX DESTINATION.