Non reporting of income tax mistakes

Non Reporting of income Tax Filing Mistakes

Non reporting of any kind of income is quite a common tax filing mistake. Here are the most

Commonly not reported types of income:

Not Reporting 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 in your 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 in your tax return. Otherwise, data reconciliation by income tax department may lead to notice.

Tax and Penalty for Not Reporting 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 in your tax return, you will get income tax notice when the TDS data is reconciled with your return data.

Income Tax Notice for Not Reporting 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 in the income tax return is a sure

shot reason to receive a notice from income tax department.