Here are 10 such transactions that the Income Tax Department keeps an eye on, and what you should know about them.
1.Education fee or donation above 1L p.a.
If you pay more than INR 1 lakh as education fees or donations, it will be scrutinised by the Income Tax Department. Educational institutions are required to issue Form 16A to parents or students who have paid fees exceeding INR 1 lakh per annum. Therefore, it’s important to keep these documents safe for filing tax returns.
2.Electric bill above 1 lakh p.a.
If you’re a business owner or high net worth individual, your electricity bill may exceed INR 1 lakh per annum. In such cases, the Income Tax Department can question the source of funds for paying the bill. Ensure that you have appropriate documentation for such transactions, including invoices, receipts, and bank statements.
3.Domestic and foreign travel
If you travel by air, especially in business class or abroad, the Income Tax Department can question the source of funds used for such travel. Ensure that you keep all travel-related documents, such as flight tickets, boarding passes, hotel bills, and visa receipts, for tax filing purposes.
4.Hotel payment above 20,000
If you pay more than INR 20,000 for a hotel stay, the transaction will be under the Income Tax Department’s scanner. Ensure that you keep all related documents, such as hotel bills, receipts, and bank statements.
5.Jewellery, marble paintings, etc. above 1 lakh
If you purchase jewellery, marble paintings, or other high-value assets exceeding INR 1 lakh, the Income Tax Department may question the source of funds used for such purchases. Ensure that you keep all relevant documents, such as invoices, receipts, and bank statements.
6.Deposits and credit in current account above 50L
If you have a current account with a balance of more than INR 50 lakhs or have made credit transactions above that limit, the Income Tax Department will examine it. Ensure that you keep all transaction-related documents, such as bank statements and invoices.
7.Deposits/credit in saving account above 25 lakh
If you have a savings account with a balance of more than INR 25 lakhs or have made credit transactions above that limit, the Income Tax Department will analyse it. Ensure that you keep all transaction-related documents, such as bank statements and invoices.
8.Property tax above 20,000
If you pay more than INR 20,000 as property tax, the Income Tax Department will examine it. Ensure that you keep all related documents, such as receipts and bank statements.
9.Life insurance premium above 50 thousand
If you pay more than INR 50,000 as life insurance premium, the Income Tax Department will analyse it. Ensure that you keep all related documents, such as insurance policy documents, receipts, and bank statements.
10.Health insurance premium above 50,000
If you pay more than INR 50,000 as health insurance premium, the Income Tax Department will evaluate it. Ensure that you keep all related documents, such as insurance policy documents, receipts, and bank statements.