ITR utility adds ‘Other Income’ field: Should you report exempt receipts? | Personal Finance
While reporting these receipts is not legally mandatory, experts say the new disclosure option can help taxpayers avoid scrutiny from the Income Tax Department, particularly when the transactions are already visible through its data systems.
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Purchase a house using a loan. -
Receive a large fixed deposit maturity amount. -
Redeem a substantial mutual fund investment and reinvest the proceeds elsewhere.
These transactions may be reported in AIS, but the source of funds may not be evident from the ITR alone, particularly where the taxpayer is not required to file a personal balance sheet.
“In such cases, the system may flag the transaction because past income may not sufficiently support the investment,” Tanna said.
He added that receipts which are not income — such as gifts, loans or substantial redemption proceeds from investments — can be disclosed under the relevant field so that the return presents a more complete picture.
Other exempt receipts taxpayers often get wrong
Jain said taxpayers also commonly make mistakes while reporting exempt retirement-related receipts.
These include:
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Voluntary Retirement Scheme (VRS) compensation, which is exempt up to the prescribed limit under Section 10(10C). -
Leave encashment on retirement, where government employees receive full exemption, while private sector employees are eligible only up to the prescribed limit.
According to Jain, taxpayers should report the exempt portion in Schedule EI while offering any taxable portion under the appropriate head of income.
“The disclosure does not create liability. It prevents the question from being asked,” he said.
First Published: Jul 07 2026 | 5:29 PM IST
