The Income-tax department is continuously monitoring your monitoring various accounts on financial platforms like banks, mutual fund houses, broker platforms, etc. to detect tax evasion. High-value cash transactions are specifically targeted by the IT department. The high-value transactions must be always reported to the income tax department if the value surpasses a particular threshold. The following 5 cash transactions may invite an income tax notice.
- Bank fixed deposit (FD): Cash deposits in a bank FD should not exceed ten lakh rupees. The Central Board of Direct Taxes (CBDT) has announced that banks must disclose if individual deposits in one or more fixed deposits exceed the prescribed limit.
- Bank savings account deposits: The maximum cash deposit in a bank account is ten lakh rupees. If a savings account holder deposits more than ten lakh rupees in a fiscal year, the income tax department may issue a tax notice. Meanwhile, any cash deposits or withdrawals from a bank account that exceed the 10 lakh limit in a fiscal year must be reported to the tax authorities. The current account cap is Rs. 50 lakh.
- Credit card bill payment: According to CBDT regulations, payments of one lakh rupees or more in cash against credit card bills must be reported to the income tax department. Furthermore, if payment of 10 lakh or more is made to settle credit card bills in a fiscal year, the payment must be reported to the tax department. Any significant transaction should be disclosed when filing an ITR. If you use a credit card for a high-value transaction, make sure to disclose it on Form 26AS when you file your ITR to avoid receiving an income tax notice.
- Real estate property sale or purchase: The property registrar is required to report to the tax authorities any investment or sale of immovable property worth 30 lakh or more. As a result, taxpayers are advised to report their cash transactions in Form 26AS when purchasing or selling real estate property.
- Investment in stocks, mutual funds, debentures, and bonds: Investors who invest in mutual funds, stocks, bonds, or debentures must ensure that their cash transactions in these investments do not exceed Rs. 10 lakh in a fiscal year. To track high-value cash transactions of taxpayers, the income tax department has developed an Annual Information Return (AIR) statement of financial transactions. On this basis, tax officials will collect information about unusually high-value transactions in a given fiscal year.
Source: The Mint