Income Tax department records various types of cash transactions. Making a large cash transaction can thus be complicated. The Income Tax Department has increased its scrutiny of cash transactions. Various financial institutions, such as mutual fund houses and banks, as well as the Income Tax department, have tightened the rules on cash transactions. They permit cash transactions up to a certain limit. If an individual makes a cash transaction that exceeds the specified limit, the Income Tax department will be notified. If you fail to report high-value transactions in a given year, you may receive a notice from the IRS, and with the deadline for filing income tax returns approaching, it is best to be aware of the details.
The I-T department has entered into agreements with several government agencies and financial institutions to gain access to individuals’ high-value transaction records. The tax department sends e-mail and SMS alerts about the non-disclosure of high-value transactions linked to a permanent account number as part of its e-campaign to promote voluntary compliance and avoid issuing notices and scrutinising taxpayers (PAN).
If an individual makes a high-value cash transaction, the Income Tax department may issue a notice. As a result, it is advised to keep high-value transactions in mind when filing ITR. Here are a few transactions which may attract notice from income tax department.
Payment of a Credit Card Bill
The Income Tax department monitors all credit card transactions, and concealing any high-value credit card transaction may attract attention. Payments of Rs 1 lakh or more in cash and Rs 10 lakh or more in any mode towards your Credit Card bills will be reported in accordance with Central Board of Direct Taxes (CBDT) regulations.
Bank Fixed Deposit
Payments of Rs 1 lakh or more in cash and Rs 10 lakh or more in any other mode to your Credit Card bills will be reported in accordance with Central Board of Direct Taxes (CBDT) regulations. If the total amount deposited in single or multiple fixed deposits exceeds the specified limits, banks must disclose the transactions by filing form 61A, a statement of financial transactions.Deposits in Bank Accounts. The maximum cash deposit amount in an FD is Rs lakh. The CBDT has announced that if a person deposits more than Rs 10 lakh in an FD, the bank must report it.
Real Estate Transactions
If a person purchases or sells a real estate property worth Rs 30 lakh or more, the property registrar will report the sale or purchase transaction.
Investment or purchase of Shares, Bonds, Mutual Funds, and Debentures
If a taxpayer makes cash transactions in Shares, Bonds, Mutual Funds, or Debentures worth more than Rs lakh in a fiscal year, the Income Tax authorities will be notified.
Foreign currency sales
Amounts of 10 lakh or more from the sale of foreign currency in a fiscal year must be reported to the Income Tax department. Purchases of foreign exchange, including travellers cheques and forex cards, as well as debit or credit cards, totaling Rs 10 lakh are reported to the tax department.