Financial transaction

5 high-value cash transactions that can land you an income tax notice

Cash deposit into a savings bank account

The cash deposit limit of a bank account is Rs 10 lakh. The Income Tax Department may issue an income tax notice to a savings account customer who deposits more than Rs 10 lakh in a fiscal year.

Accordingly, any cash deposit or withdrawal from a bank account totaling more than Rs 10 lakh in a financial year must be reported to the IRS. The current account maximum is Rs 50 lakh.

High Value Cash FD

High Value Cash FD

The maximum amount of money that can be deposited in an FD bank is Rs 10 lakh. If you are a bank depositor, you are advised not to exceed the limit of Rs 10 lakh while depositing cash into an FD bank account. The Central Direct Tax Commission (CBDT) has ordered banks to disclose whether individual deposits in one or more term deposits exceed the permitted limit.

Payment of credit card bills

Payment of credit card bills

According to the CBDT, cash payments of Rs 1 lakh or more against credit card arrears must be recorded. Additionally, if a payment of Rs 10 lakh or more is made to settle credit card obligations during a financial year, the amount must be reported to the tax authorities. The most pressing concern, however, is the income tax that applies to credit card purchases.

You must ensure that you do not exceed your credit card spending limit, as the tax authorities keep track of credit card transactions because your credit card information is connected to your PAN card, allowing the government to easily monitor your spending online. Any material transactions must be disclosed when submitting an ITR (Income Tax Return).

Cash Transactions in Stocks, Debentures, Bonds and Mutual Funds

Cash Transactions in Stocks, Debentures, Bonds and Mutual Funds

Companies or organizations that issue bonds or debentures would be required to record receipts of Rs 10 lakh or more in a financial year from any individual for the purpose of purchasing bonds or debentures. A similar restriction was imposed for the reporting of stock and mutual fund purchases.

The Department of Income Tax has created a Financial Transactions Annual Information Return (AID) account to help taxpayers track high-value transactions. Based on this, tax officials will gather information about transactions of an unusually large amount in a given fiscal year.

Purchase or sale of real estate

Purchase or sale of real estate

The Property Registrar must disclose any investment or sale of real estate worth more than Rs 30 lakh to the tax authorities. The acquisition or sale of the property must be declared using Form No. 26AS. You are on the radar of the Income Tax Department if you buy or sell a property for more than Rs 30 lakh.