Income Tax Rule for Underreporting Income Some people sometimes show their income by reducing their income in Income Tax Return (ITR) to save tax. Doing so can be extremely dangerous. This also spoils your financial profile and the Income Tax Department can take major action along with giving notice to you.
The last date for submission of ITR for the financial year 2022-23 is July 31, 2023. In such a situation, every person has to file his income tax return with correct information before this date, but people in India find different ways to save tax . Many people under-report their income in ITR for this reason.
Doing this can cost you a lot, the government also warns about this from time to time, so that people do not file their ITR with wrong income.
How much is the penalty for showing less income in ITR?
According to the Income Tax Act, 1961, if someone under-reports his income or claims a wrong deduction, he will be liable to pay a penalty of 200 percent of the tax due and 12 percent interest per annum. Looking at the seriousness of the case, he can also be put in jail.
What to do in case of wrong ITR filing?
If you have wrongly declared your income in ITR, then the Income Tax Department gives you one more chance to rectify this mistake. Under Section 140B of Income Tax, you can file an updated return for FY 2021-22 and Assessment Year 2022-23 by paying the outstanding tax. Revised return u/s 139(5) can be filed for Assessment Year 2023-24, when you have already filed the return.
Income tax can give notice due to these reasons
- If you file ITR with the wrong form, then the Income Tax Department can give you a notice. Before filing ITR, you should choose the correct form.
- When you have wrongly claimed deductions to under-report your income.
- You have not shown any source of income.
- You have shown income in ITR less than your correct income.
- Your ITR information is not being found from Form 26AS.
