I am 26 years unmarried and residing in Belagavi. I earn a salary of INR 4 Lakhs a year. I will file ITR by July 31st 2017 but I plan not to mention the profits/capital gainsof around INR 50,000 I have made in the stock market. What kind of penalties are levied by the tax officer if I am caught. Kindly advise?
The last date for filing your income tax returns for the financial year 2016-17 is just a few days away, 31st July 2017. While filing your return, you are supposed to disclose all your incomes under all the income tax heads, irrespective of the amount of income or whether the income is considered tax-exempt or taxable. You may have to pay penalties if you under-report your income while filing your income tax returns. 1. If you do not file a return, but your income was taxable (i.e., more than INR 2.5 lakhsa year), then it will be considered as a case of under-reporting. 2. Another scenario is when the return is filed but upon assessment the department finds that your income is more than what was declared in the return, this is also under-reporting. 3. According to the Finance Bill 2016, a new section 270A was inserted in the Income-tax Act, 1961, and will be effective from assessment year 2017-18. The Act now provides that an assessing officer (AO), a commissioner (appeals), a principal commissioner or a commissioner may direct that any person who has under-reported income shall be liable to pay penalty in addition to the tax, if any, on such income. Under section 270A, under-reporting of income can attract a penalty of up to 50% of the tax payable on under-reported income.For instance, if you are in 30% tax bracket and under-report an income of INR 1 lakh in your returns, upon assessment, the assessing officer can impose a penalty of up to about INR 15,000 (50% of the tax on under-reported income, i.e., INR 30,000).