The income tax department has become very vigilant against cash transactions these days. In recent years, the Department of Income Tax and various investment platforms such as banks, mutual fund companies, broker platforms, etc. have tightened the rules for cash transactions for the general public. Now, these investment and credit institutions only allow cash transactions to a certain limit. In the event of a minor violation, the Income Tax Department may notify the offender.
Advise taxpayers to report high value cash transactions on their income tax return (RTI); Amit Gupta, MD at SAG Infotech, said, “If an individual conducts high value cash transactions, chances are he or she will receive a notice from the income tax department. The various transactions related to cash include banks, mutual fund companies, brokerage houses, and property registrars. Large value transactions should always be reported to the income tax department if the value exceeds a particular threshold. The Income Tax Department has made agreements with several government agencies to obtain the financial records of people who engage in high value transactions, but do not report them on their tax returns.
Among the top 5 cash transactions that can result in an income tax notice, the managing director of the registered income tax solution provider company SEBI listed the following:
1]Bank term deposit (FD): Cash deposits in FD bank should not exceed ??10 lakh. The Central Commission on Direct Taxes (CBDT) has announced that banks must disclose whether individual deposits exceed the prescribed limit in one or more term deposits.
2]Deposits on bank savings account: The limit for depositing cash into a bank account is ??10 lakh. If the holder of a savings account deposits more than ??10 lakh in a fiscal year, the income tax department may serve an income tax notice. Meanwhile, cash deposits and withdrawals from a bank account cross ??The limit of 10 lakh in a financial year must be disclosed to the tax authorities. In current accounts, the limit is ??50 lakh.
3]Bill payment by credit card: According to the CBDT standards, the payment of ??1 lakh or more in cash against credit card bills should be reported to the income tax department. In addition, if the payment of ??10 lakh or more is paid in a fiscal year to settle credit card bills, payment must be disclosed to the tax department.
“Any large transaction must be disclosed when filing the RTI. If you are using credit cards for high value transactions, be sure to disclose them on Form 26AS when filing your RTI to avoid receiving a notice. ‘income tax,’ said Amit Gupta.
4]Sale or purchase of real estate: The registrar must disclose any investment or sale of a building for an amount of ??30 lakh or more to the tax authorities. So, when making any purchase or sale of real estate, taxpayers are advised to report their transaction in cash on Form 26AS, as the property registrar would certainly report it.
5]Investment in stocks, mutual funds, bonds and bonds: Investors who invest in mutual funds, stocks, bonds or debentures should ensure that their cash transaction in such investments does not exceed ??10 lakh in one exercise. The Income Tax Department created an Annual Financial Transactions Information Return (AIR) to track high value cash transactions of taxpayers. On this basis, tax officials will collect details of unusual high value transactions during a particular fiscal year.
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