If an individual makes high-value cash transactions, there is a strong possibility that he/she might get a notice from the Income Tax Department. The high-value transactions must always be reported to the Income Tax Department if the value surpasses a particular threshold limit. The I-T Department has settlements with multiple government agencies to obtain financial records of individuals who indulge in high-value transactions but do not report them while filing their return.
The tax man is watching you for these transactions
Making certain expensive or big-ticket transactions in cash can turn the Income-Tax Department’s gaze to you. The tax man is always on the lookout for high-value cash transactions, one slip up and you get slapped with a notice from the authorities. Banks, mutual fund houses, brokerages, registrar of properties and other financial intermediaries are obligated to inform the tax department if you transact via cash beyond prescribed limits. Listed below are six big-ticket cash transactions that can fetch you a income tax notice.
Deposit in bank FD
The Central Board of Direct Taxes (CBDT) has made it clear that banks have to report occurrences when someone deposits, in one or more time deposits (other than that made through renewal of another time deposit), an amount aggregating to Rs 10 lakh or more in a financial year.
Deposits in bank accounts
CBDT has made it mandatory for all banks, including cooperative banks, to report cash deposits aggregating to Rs 10 lakh or more during a financial year, in one or more accounts (other than a current account and time deposit) of an individual.
Credit card bill payments
Payments made of an amount adding to Rs 1 lakh or more in cash towards credit card dues must be reported, states CBDT. Further, if one pays Rs 10 lakh or more to settle credit card dues in a financial year (in any mode), these transactions too need to be reported to the income tax department.
Purchase of foreign exchange
Purchase of foreign exchange, including travellers cheque and forex cards, debit or credit cards, aggregating to Rs 10 lakh also needs to be reported.
Purchase of these investment instruments
Financial institutions and firms issuing bonds or debentures must report receipts from any person of an amount totaling Rs 10 lakh or more in a financial year for acquiring such bonds or debentures. A similar limit is set for reporting the purchase of shares and mutual funds.
Property payments
The property registrar is mandated to report to the tax authorities a purchase or sale by any person of immovable property for an amount of Rs 30 lakh or exceeding it.