ITR filing 2025: Joint account holders, Beware! This small mistake, and be ready for an income tax notice

Many families use joint bank accounts for convenience, whether it is with a spouse, or parents. While these accounts make it easy to manage shared expenses, they also come with a hidden risk of unexpected income tax complications.

With the ITR filing deadline fast approaching, it is important for joint account holders to understand how these accounts can trigger an unwanted tax notice.

"Chartered Accountants are an increasing group who caution holders of joint bank accounts against even inadvertent triggering of tax implications. Joint accounts provide a great deal of convenience for families or business partners, many taxpayers overlook the fact that income is attributed by tax authorities to the rightful owner of funds and not merely based on whose name happens to be registered on the account," said CA Gaurav Singh Parmar, Associate Director, Fincorpit Consulting.

What is the main issue with joint bank account?

Banks record all interest income to each account holder, which is the primary problem with joint accounts. However, only the owner of the funds is expected by the government to report that income, and this discrepancy may result in a tax notice for all parties.

Misreporting interest income or fixed deposit returns from joint accounts is a common mistake made by taxpayers. During data cross-verification by the revenue Tax Department, for example, if one individual donates the majority of the funds but the other declares the revenue under their PAN, this discrepancy may result in tax notices.

"Incorrect reporting of deposits or fixed deposits or interest income belonging to a joint account leads to mismatched notices going to both of the holders. Consider one partner contributing most of the funds and another one filing returns under PAN; such a situation would create mismatches during data cross-verification," explained CA Gaurav Singh.

⦁ Maintain clear records of fund ownership

⦁ Report interest income under the rightful PAN

⦁ Don’t mix personal funds with shared or family accounts casually