Filing your Income Tax Return (ITR) requires more than just reporting your income and deductions. According to Sujit Bangar, founder of TaxBuddy, overlooking key disclosures can render your return “defective” and lead to significant penalties, including a potential ₹10 lakh fine and imprisonment, especially for non-disclosure of foreign assets.
Here are eight critical areas that taxpayers must pay attention to, as highlighted by Bangar:
- Foreign Assets (Schedule FA): If you are an Indian resident with overseas bank accounts, securities, immovable property, or other foreign assets, you must declare them. Failing to do so can result in a ₹10 lakh penalty and a prison sentence. A relief is available for certain assets valued below ₹20 lakh.
- Foreign Income (Schedule FSI): Report all income earned outside India on a country-by-country basis. This includes the nature of the income, the amount, and any taxes paid. Non-disclosure can lead to the same severe penalties as for foreign assets.
- Crypto/NFTs (Schedule VDA): Every transaction involving cryptocurrencies, NFTs, and other Virtual Digital Assets must be disclosed, providing details on acquisition, sale, and cost. It’s important to remember that losses from these assets cannot be set off against other incomes.
- Unlisted Equity Shares: Anyone holding shares of a company that is not publicly listed must provide details, including the purchase/sale dates, company name, face value, and quantity.
- Directorships: If you are a director in a company, you are required to disclose your DIN (Director Identification Number), the company’s PAN, and whether it is a listed or unlisted entity.
- Assets & Liabilities (Schedule AL): Taxpayers with an income exceeding ₹1 crore must declare their assets and liabilities. This includes details of immovable property, vehicles, jewelry, cash, and loans.
- Partnership in a Firm (Schedule IF): Partners in a firm filing ITR-3 must report their shareholding percentage and remuneration. This information should align with the details provided in the firm’s ITR-5.
- Bank Accounts & Verification: Ensure that the bank account for any tax refund is pre-validated with the correct IFSC code. Crucially, your ITR must be e-verified within 30 days of filing, or it will not be considered a valid return.
Bangar emphasizes that missing even a single disclosure can make your ITR defective under Section 139(9) of the Income Tax Act, potentially leading to legal and financial repercussions.