Clipped from: https://www.taxscan.in/taxpayers-beware-these-high-value-transactions-can-attract-show-cause-notice-from-income-tax-dept/247644/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=Taxpayers%20Beware!%20These%20High%20Value%20Transactions%20can%20attract%20Show%20Cause%20Notice%20from%20Income%20Tax%20Dept
Being frequently involved with high value transactions can put you under the radar of the Income Tax Department and unsurprisingly, you may also be served with a show cause notice as to why you should not be taxed, or to why the same was not reflected in the Income Tax Returns of the relevant year.
The Income Tax department and a number of financial organizations, including banks and mutual fund firms, have tightened the regulations on cash transactions. Cash transactions are permitted, but only to a certain degree, as per the Section 269SS of the Income Tax Act, 1961.
The Income Tax department may send you a show cause notice if you do not report high-value transactions in any particular year, so it is wise to be informed of the specifics as the time for completing income tax returns draws near.
As a result, when filing Income Tax Returns, taxpayers are advised to keep the high-value transactions in mind. Here are a few transactions that may draw the attention of the income tax department :–
Credit Card Bill Payments: Any payment of your credit card bills exceeding 1 Lakh Rupees or more in Cash, or Rs. 10 Lakhs by any other mode will be reported to the tax authorities, as per the regulations of the Central Board of Direct Taxes (CBDT).
Property related Transactions: Purchase/Sale of real estate worth more than Rs. 30 Lakhs is reportable by the Registrar to the appropriate Income Tax Authority,
Sale of Foreign Currency: Purchases/Sales of foreign currencies exceeding Rupees 10 Lakh in a Financial Year, along with Forex Cards and Travelers’ Checks are reportable to the tax department.
Bank Deposits: Current Accounts with deposits in excess of Rs. 50 Lakhs and Savings Bank (SB) accounts with deposits exceeding Rs. 10 Lakhs in a financial year attract the attention of the department. Cash deposits in Fixed Deposits (FDs) exceeding Rs. 10 Lakh limit in a financial year can also put you under the radar.
Securities Transactions: Investments exceeding 10 Lakh Rupees in mutual funds, equity shares, debentures and bonds also invite the attention of the tax authorities.
The following High Value Transaction Limits (in Rupees) have been incorporated recently to the vigilance regime of the Income Tax, exceeding which may trigger the department to issue notice and proceed to recover taxes : –
Payment of property tax (per annum) – 20,000
Health and Life Insurance Premiums – 20,000 and 50,000
Hotel Bills – 20,000
Payments of Educational Fees and Donations – 1 Lakh
Electricity Bill – 1 Lakh
Jewelry purchases – 1 Lakh
Term Deposits – 10 Lakhs
If you plan on investing in any of these, make sure that you have the sufficient documents to show the source of income and avoid using cash for transactions, whenever possible.
Notably, the filing of Income Tax Returns have also been made compulsory for businesses and professionals with turnover above Rs. 50 Lakh, and the individuals with bank transactions exceeding Rs. 30 Lakhs and whose monthly rent payments exceed Rs. 40,000.
Form 26AS and/or Annual Information System (AIS) statement can be cautiously used to know the high value transactions recorded for your PAN.
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