SHORT ANSWER:
Not declaring bank interest in Income Tax Return (ITR) can lead to penalties and interest on unpaid tax.
DETAILS:
- The Income Tax Department may treat the undeclared income as tax evasion.
- You may receive a notice for reassessment of your income.
- You are required to pay tax on the undeclared interest along with penalties.
PUNISHMENT / IMPLICATIONS (if applicable):
- Penalty under Section 271(1)(c) of the Income Tax Act for concealment of income.
- Interest under Section 234A for late payment of tax.
SOURCE:
- Income Tax Act, 1961
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