Every year, while assisting individuals in filing their Income Tax Returns (ITRs), we have observed a recurring oversight: many taxpayers report the interest income from multiple savings accounts, yet mention only one or two bank accounts in the return form.
This may seem like a small mistake, but it can lead to misreporting as per the Income Tax act, potentially triggering a notice or scrutiny.
In FY 2024–25 (AY 2025–26), let’s make sure this error is not repeated.
Why Is It Important to Report All Bank Accounts in the ITR?
The Income Tax Department has become increasingly data-savvy, with access to comprehensive financial data through PAN, Aadhaar, and linked banking systems. If interest income is being reported in the TDS (Form 26AS or AIS) or flagged through bank transactions, but the corresponding bank account isn’t listed in your return, it may be seen as incomplete disclosure.
More importantly, when you’re eligible for a refund, the bank account must be pre-validated and correctly mentioned in your ITR. Any mismatch or missing information can lead to refund delays or rejections.
What Do the ITR Instructions Say?
The Income Tax Return forms (ITR-1 to ITR-7) come with detailed instructions, and they are very clear on how bank accounts should be reported. Here’s a summary of what you should follow:
1. Report All Bank Accounts Held During the Financial Year
Regardless of the number of bank accounts you own, you are required to report all savings and current accounts that were held at any time during the previous financial year (1st April to 31st March). This includes:
- Joint accounts
- Recently opened accounts
- Business-related current accounts (if applicable)
2. Accounts Opened on the Last Day of FY Must Also Be Reported
Even if you opened an account on 31st March 2025, you still need to include it in your return. The rule is simple: any account held at any time during the year, whether for one day or the whole year, must be disclosed.
3. Dormant Accounts Can Be Omitted
If an account is dormant as per bank records (no transaction activity and flagged as dormant), you are not required to report it in the ITR.
4. Select One Bank Account for Income Tax Refund
If you’re due for a tax refund, you must:
- Select one bank account from the list of reported accounts
- Ensure it is pre-validated and linked with your PAN
- Make sure the IFSC and account number are accurate
Pre-validation can be done through your e-filing portal dashboard. A mismatch or an unverified account will delay the refund process.
Step-by-Step: How to Report Multiple Bank Accounts in the ITR Form
- Log in to the income tax e-filing portal
- Choose the appropriate ITR Form (ITR-1, ITR-2, etc.)
- Navigate to the “Bank Details” section
- Enter:
- Bank Name
- Account Number
- IFSC Code
- Indicate if the account is selected for refund
- Add all other accounts held during the year
- Exclude dormant accounts only if they have been declared as such by the bank
- Submit and verify your return with Aadhaar OTP, EVC, or DSC
Practical Example
Suppose you hold savings accounts with SBI, HDFC, Axis, ICICI, and a current account with Kotak for your freelance income. You received interest from all five, and report the total interest in your ITR. However, if you mention only the SBI and HDFC accounts in the bank account section of your return, the mismatch might raise a red flag with the Department, especially if AIS or Form 26AS includes PAN-linked data from the other banks.
To stay compliant, you should report all five accounts and select one (say SBI) for receiving the refund.
Consequences of Not Reporting All Bank Accounts
- Mismatch notices or queries from CPC or AO
- Misreporting penalties under Section 270A
- Risk of being flagged for non-compliance or high-risk profile
While it might seem like a minor oversight, not following this rule carefully can lead to bigger problems later.
Final Words
In today’s digital tax ecosystem, transparency and completeness are non-negotiable. Don’t take shortcuts, reporting all relevant bank accounts while filing your Income Tax Return is not just a good practice, it is a requirement.
If you’re unsure which accounts qualify or need help compiling your bank details and interest income, it’s best to consult a tax advisor or chartered accountant.
Let this year be the one where your ITR is complete, accurate, and compliant.
