While cash transactions have become easier and handy with the advent of technology, one needs to remain vigilant so as not to attract an Income Tax notice. Moreover, if a stock market investor makes investments via demand draft using cash, the broker will report about the same in its balance sheet.
So, here are the top 5 high value cash transactions that people must be careful about making:
1. Savings/Current account
The cash deposit limit in a savings account has been fixed at Rs 1 lakh for an individual. So, if a savings account holder makes a deposit over the limit in one’s savings account, they might get a notice from the income tax department.
Likewise, the limit for current account holders has been set at Rs 50 lakh, a violation of which could attract a notice by the income tax department.
2. Credit Card bill payment
Credit Cards have made payments easy and hassle-free for many individuals. However, users must bear in mind that while paying their card bill, they should not cross the Rs 1 lakh limit. The IT department might serve you notice if the cash limit is exceeded.
3. Bank FD (fixed deposit)
A very common investment tool, banks FDs allow a cash deposit of up to Rs 10 lakh. Going beyond the set amount is not advisable for depositors fearing a notice by the tax agency.
4. Mutual fund/stock market/bond/debenture
The recent times have seen a massive surge in the number of demat account holders in India. However, people investing in the share market must know that the cash infusion should not exceed Rs 10 lakh limit. If someone goes beyond the limit, they might get noticed by the income tax department, which could lead to opening of their last Income Tax Return (ITR).
5. Real estate
When dealing in trading property, individuals must be aware that a cash transaction above Rs 30 lakh is not advisable. Transacting above the limit attracts the attention of the income tax department.