Large Value Transactions That May Qualify You For An Income Tax Notice – View Full List

Deposits and withdrawals of cash from a bank account exceeding the limit of Rs 10 lakh during a financial year must be disclosed to the tax authorities.

If a person conducts high value cash transactions, it is quite possible that they will receive a notice from the income tax department. Large value transactions should always be reported to the income tax office if the value exceeds a certain threshold. The IT department has made deals with several government agencies to obtain the financial records of people who engage in high value transactions but do not report them when filing their return.

Here are some transactions for which you may receive notice from the Income Tax Service:

Make high value deposits in bank FDs

Cash deposits at FD bank should not exceed Rs 10 lakh. A bank depositor making a cash deposit to an FD bank account is advised not to exceed the limit of Rs 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.

Make deposits to savings accounts

The cash deposit limit in a bank account is Rs 10 lakh. If the holder of a savings account deposits more than Rs 10 lakh in a financial year, the Income Tax Department may serve an income tax notice.

Therefore, deposits and withdrawals of cash from a bank account exceeding the limit of Rs 10 lakh during a financial year must be disclosed to the tax authorities. In current accounts, the ceiling is Rs 50 lakh.

Pay credit card bills

According to CBDT, payment of Rs 1 lakh or more in cash against credit card bills should be reported. Additionally, if a payment of Rs 10 lakh or more is made during a fiscal year to settle credit card bills, the payment should be disclosed to the tax department. The main and crucial concern, however, is the income tax that applies to credit card transactions. You should check that you do not exceed your credit card spending limit as the tax authority keeps track of credit card transactions as your credit card details are linked to your PAN card and therefore can be easily monitored online by the government. Any significant transaction must be disclosed when filing the RTI.

Purchase or sale of a building

The registrar of property must have to disclose any investment or sale of real estate for an amount of Rs 30 lakh or more to the tax authorities. The property purchase / sale transaction must be reported on your Form # 26AS. In the event that you are buying or selling a property for more than Rs 30 lakh, you are also on the radar of the income tax department. The income tax department can examine whether the buyer reported the income on their tax return.

Cash transactions related to stocks, mutual funds, debentures and bonds

Some people who invest in mutual funds, stocks, bonds or debentures should make sure that their cash transaction in these investments does not exceed Rs 10 lakh. The IT department created an annual financial transaction information return (AIR) to track high value taxpayer transactions. On this basis, tax officials will collect details of unusual high value transactions during a particular fiscal year. If an expense or transaction was listed as a high value transaction, check the AIR section of your Form 26AS. PART -E of Form 26AS combines details of high value financial transactions.

Sale of currencies and foreign exchange expenses

An amount of Rs 10 lakh or more during a fiscal year received by any individual for the sale of foreign currency, as well as any credit in that currency, through a debit card or credit card or traveler’s check insurance, draft or other instruments, should be notified to the Directorate of Income Taxes.

(By Amit Gupta, MD at SAG Infotech)

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