Reporting bank details in I-T returns

Ensure you file a correct return. A look at the requirements regarding bank accounts

Ensuring that you file your return of income well within the due date is important. But what is more crucial is that you file a correct and a complete return of income. There are certain aspects that you must take care of while filing a return, like selecting the appropriate return filing form, depending on the nature of your income, filling in your personal details correctly, disclosing all your sources of income, claiming the right deductions and exemptions.

Reporting your bank account details in the return is one such critical requirement. Taxpayers express doubts over what has to be reported here, extent of reporting, and so on. This article discusses this reporting requirement in detail.

Details of bank accounts

Under this schedule, details of all the savings and current accounts you have held at any time during the financial year must be reported.

Information pertaining to the IFSC code of the bank, the name of the bank and the account number needs to be furnished. Further, you may indicate separately in the return itself, the bank account to which you wish your refund to be credited. This must be indicated, irrespective of whether you have a refund position for the year or not.

However, details of dormant accounts need not be furnished. Dormant accounts, for the purpose of filing returns, are those that have not been operational for at least three years.

According to the Reserve Bank of India (RBI) guidelines, an account can be considered inoperational and, hence, dormant if no transactions are initiated by the customer, such as withdrawal, payment by cheque, transfer of funds through internet banking, phone banking, and so on. A case of credit of savings account interest into the account is system-generated and cannot be considered as a transaction induced by the customer. However, credit of interest from a fixed deposit will be considered as customer-induced and can help keep the account live. Therefore, details of such accounts have to be reported by the taxpayer in his return.

Joint account details

The requirement in the income-tax return with respect to furnishing of bank account details is clear in as much as it requires details of every bank account held at any point of time during the year, carving out an exception only for dormant accounts. Therefore, even if the taxpayer is a joint account holder, he is bound to report this. In fact, it is suggested that both account holders report this in their respective returns unless the joint account is a dormant one.

Requirements for NRIs

Refund determined upon processing of return of income is credited directly into the bank accounts of the tax-payers. The availability of bank account details in which the refund is to be credited is a mandate for direct credit of refund in the bank accounts.

Earlier, NRIs filing a return in India and claiming a refund were facing genuine hardship in getting these refunds in cases where they did not have bank accounts in India. The returns too did not have a provision for providing foreign bank account details for getting refunds.

To address this, from AY 2017-18, the return filing utility has been modified to include a field for reporting of details of a foreign bank account by NRIs, who do not have bank accounts in India but are claiming a refund.

However, if an NRI has a bank account in India, he can furnish details of the same and is not required to give foreign bank account details. An NRI is not under any mandate to open a bank account in India merely for the purpose of receiving refunds, as the return forms now provide for direct credit of refunds to the foreign bank accounts too.

NRI have to furnish details of the SWIFT Code, name of the bank, IBAN and country of location. A SWIFT code is specific to a bank and helps identify the bank where the NRI has an account, while IBAN or International Bank Account Number, is what an NRI can use when making or receiving international payments.

It is used to identify the NRI’s individual account with the foreign bank.

The writer is founder and CEO, ClearTax

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