The income tax department monitors large cash transactions over a specific limit. If you fail to report these transactions on your tax return (ITR), you may receive a notice from the authorities.
The IT department monitors high-value cash transactions, including bank deposits, mutual fund investments, real estate transactions, and stock transactions. If transactions exceed the threshold, you must notify IT to avoid receiving a notification.
The IT department has entered into agreements with several government agencies and financial institutions to access individuals’ records regarding high-value transactions.
As part of its e-campaign to promote voluntary compliance and avoid the issuance of the notice and the control of taxpayers, the tax administration sends alerts by e-mail and SMS on the non-disclosure of transactions of high value linked to a permanent account number (PAN).
Here are a few transactions that may catch IT’s attention if not flagged in the RTI.
Deposits in savings bank account and current account
Any transaction exceeding Rs 10 lakh in a savings bank account during a financial year must be disclosed to the IT department. Similarly, for current accounts, the threshold limit is Rs 50 lakh.
Fixed deposits in banks
Cash deposits into the FD bank account exceeding Rs 10 lakh should be notified to the IT department. Banks will be required to disclose transactions if the total amount deposited in single or multiple fixed deposits exceeds limits specified by filing Form 61A, a Statement of Financial Transactions.
Credit card bills
Credit card bill payments over Rs 1 lakh in cash should be reported to the IT department. The income tax department monitors all credit card transactions, and hiding any high-value credit card transactions could attract attention. Settlements above Rs 10 lakh in a financial year for credit card bills must be disclosed in the ITR.
Sale or purchase of real estate
All property registrars and sub-registrars across the country are mandated to notify the tax authorities of the sale or purchase of any property exceeding Rs 30 lakh.
Stocks, mutual funds, debentures and bonds
The cash transaction limit for investments in mutual funds, stocks, bonds or debentures must not exceed Rs 10 lakh in any financial year.
The Annual Information Statement (AIR) contains details of financial transactions, and tax authorities trace high-value transactions through it. Part E of your Form 26AS contains all the details of high value transactions.
Sale of foreign currencies
An amount of Rs 10 lakh or more in a financial year from the sale of foreign currency must be reported to the Income Tax Department.