Report All Income When Filing Tax Return

One of the common mistakes made by tax payers while filing tax return is not reporting certain types of income. Non-reporting of exempt income, bank interest income or income from previous employer can not only invite penalty, but also a notice from the Income Tax department.
Filing Tax return: Commonly Not Reported Income
Exempt Income: Several incomes, such as dividends and long-term capital gains on listed securities, are exempt from tax. Even though you do not need to pay any tax on these incomes, you must report these when filing tax return. Since these incomes are reported to income tax department by companies and brokerage firms, you must also make sure to provide these details while filing tax return. Otherwise, data reconciliation by income tax department may lead to notice.
Income from Previous Employer: Every employer deducts tax on the basis of annual salary of the employee. While computing the amount of tax to be deducted (TDS), employers provide the benefit of basic exemption and deductions to the employee. If one has changed jobs during the year, both the employers will give the tax benefit of basic exemption and deductions to the employee and hence less TDS would be deducted from salary. This leads to additional tax liability at the time of filing return.
In case you do not report previous employer income while filing tax return, you will get income tax notice when the TDS data is reconciled with your return data.
Bank Interest Income: It is a common misconception that either the interest income from savings or fixed deposit accounts is not taxable, or that tax has already been deducted on interest income by bank. In fact, banks only deduct 10% TDS on interest income, whereas you may be in the 30% tax slab. Income Tax department has recently started reconciliation of TDS data received from banks and the interest income reported by individuals in their returns. Non-reporting of interest income when filing tax return is a sure shot reason to receive a notice from income tax department.