ITR Filing Warning: Hiding Income Can Cost You 200% Penalty & Jail Time

ITR Filing 2025: As per the rules of Income Tax Act, in some cases, a penalty of 50% of the tax can be imposed for under-reporting and up to 200% for deliberate mis-reporting. There is also the risk of criminal action i.e. imprisonment.

The season of filing Income Tax Return (ITR) is underway. From salaried people to businessmen, everyone is filing ITR. There are only 2 days left for the last date to file ITR. For the financial year 2024-25 (assessment year 2025-26), individual taxpayers need to file the return by September 15, 2025. It is very important to disclose your income and tax details correctly while filing Income Tax Return (ITR). If you are also going to file ITR, then know that showing less income or wrong income while filing ITR can prove to be costly for you.

Also Read: Sukanya Samriddhi Yojana: You will get a fund of 16 lakhs on an annual investment of just ₹ 35,000, know at what age you…

Sometimes people unknowingly or carelessly understate their income (underreporting) or give incorrect information (misreporting). But doing so can get you into trouble. The tax department’s rules clearly state that providing incorrect or incomplete information can result in hefty fines, interest and even legal action.

What is under-reporting?

When a taxpayer shows less income than their actual income and hides the taxable portion, it is called under-reporting.

What is false reporting?

Providing false or misleading income details — such as showing false sources of income, submitting fake bills, or claiming false exemptions/deductions.

Also Read: How can people working from home get tax exemption on electricity and internet?

What does the law say?

• Section 270A: Penalty – 50 percent of tax due for underreporting, up to 200 percent for incorrect reporting (such as intentionally showing incorrect income).
• Interest (Section 234A, 234B, 234C) – If tax is underpaid due to under-reporting, interest will continue to accrue on it.
• Notice and Investigation- If there is any discrepancy between the information provided by you and Form 26AS, AIS or bank records, the tax department may send a notice. Valid exemptions and deductions may also be cancelled. In serious cases, fines, court cases and even jail time may follow.

Also Read: School Holiday: Good news! 17th September is a government holiday, all schools and colleges will remain closed