The current process of filing returns has been simplified by the Income Tax Department of India to a large extent through digitization. One of the significant step in this direction is making it non-mandatory for the taxpayers to attach supporting documents (unless specified in the ITR form or summoned later) at the time of filing returns. The IT department has access to electronic records of taxpayers through their PAN and can cross-verify the information provided by the them in the ITR form. Moreover, Central Board of Direct Taxes (CBDT) has made it mandatory for all taxpayers to disclose all their bank accounts in the ITR form.
Reasons Behind Disclosure
The focus of the IT department is on collecting information of taxpayers in digital format. This information helps them in analysing parity between income, expenses and investments stated by taxpayers. Most of this information can point at undisclosed income and black money.
Another positive reason for furnishing correct bank details at the tax payer’s end shall be the credit of tax refund. In case of refund claim, the amount is directly deposited into a taxpayer’s bank account. For this purpose, complete details of bank account are required; otherwise credit of refund would be delayed or rejected.
What Bank Details Need To Be Disclosed?
The ITR form is very clear in its wording when it comes to the disclosure of bank account details. The taxpayers need to mention the number of “savings and current” accounts held by them in the previous financial year. This would include even those accounts that were opened and/or closed during this time frame i.e April to March. Therefore, even those accounts that were opened after 1st April but closed before March 31st need to be mentioned in the ITR form.
The bank details that are sought in the ITR form as of now are as follows:
- IFSC code
- Bank name
- Account number
- Bank Account type
Failure To Disclose Bank Details
The failure to disclose complete details of all bank accounts held during the previous year can land a taxpayer in a lot of trouble especially if he has concealed income pertaining to undisclosed bank account/s. Usually, a notice would be sent first to seek a clarification on non-disclosure. If the department is dissatisfied, then it can levy heavy penalty on him. Section 271(1)(C) of the Income Tax Act provides for penalties during the course of assessment proceedings if the assessing officer discovers that a taxpayer has concealed or furnished inaccurate particulars of income.
It is in the best interest of the taxpayers to disclose all their bank details completely and honestly. This is because the IT department will be able to track the non-disclosure easily.
Get in touch with us at firstname.lastname@example.org to understand bank disclosure mandate and file returns easily.