Filing Your Income Tax Return: The Importance of Complete Disclosures
Filing an Income Tax Return (ITR) without full disclosures can prove costly. Sujit Bangar, Founder of TaxBuddy, warns that the non-disclosure of certain financial details—especially regarding foreign assets—can lead to defective returns and severe penalties of up to ₹10 lakh, along with the possibility of imprisonment. In a recent post on X (formerly Twitter), Bangar emphasized, “Miss one disclosure in your ITR, and your return might get defective. For non-disclosure of foreign assets, a ₹10 lakh penalty may be applicable.”
Taxpayers must remain vigilant and ensure they do not overlook critical areas of disclosure while filing their returns. Here are eight essential disclosure areas highlighted by Bangar:
1. Foreign Assets (Schedule FA)
This is mandatory for residents holding overseas bank accounts, securities, insurance, ESOPs, immovable property, or signatory rights. Non-disclosure may attract a hefty ₹10 lakh penalty and imprisonment ranging from six months to seven years. However, relief is available if the total value of foreign assets (excluding immovable property) is below ₹20 lakh.
2. Foreign Income (Schedule FSI)
Taxpayers must report their foreign income based on the country, detailing its nature, tax paid, and amounts earned. The same penalty provisions apply here as for foreign assets.
3. Crypto/NFTs (Schedule VDA)
Every transaction involving cryptocurrencies and NFTs must be disclosed, including acquisition, sale, cost, and value details. It’s crucial to note that losses from these can’t be set off under Section 115BBH.
Disclosure of shareholding details for unlisted equity shares, including dates of purchase/sale, company names, face value, and quantities, is mandatory.
5. Directorships
Individuals who are directors must disclose their Director Identification Number (DIN), the company PAN, and indicate whether the company is listed or unlisted.
6. Assets & Liabilities (Schedule AL)
This is compulsory for taxpayers with income exceeding ₹1 crore and covers disclosures related to immovable property, jewellery, vehicles, shares, cash, loans, advances, and liabilities.
7. Partnership in Firm (Schedule IF)
Partners filing ITR-3 are required to report firm details, including percentage shareholding and remuneration, which should align with the firm’s ITR-5.
8. Bank Accounts & Verification
It is essential that refund accounts are pre-validated with accurate IFSC codes, and e-verification should be completed within 30 days. If not, the return is not considered filed.
Bangar stressed that any missing or incorrect disclosures could make a return defective under Section 139(9). He particularly cautions that overlooking foreign assets can result in dire financial and legal repercussions.
In conclusion, taxpayers must take their filing responsibilities seriously and ensure all disclosures are accurate and complete to avoid severe penalties and complications.
