High Value Transactions Attracts Income Tax Department Notices

The Income Tax Department is quite likely to issue a notice to any individual who often participates in cash transactions of huge ๐Ÿ’ฐ value. If the value of a transaction exceeds a certain limit, the taxpayer must inform the Income Tax Department if he engages in High Value Transactions.

In today’s era of digital transactions, when the government keeps tabs on all of your financial dealings, the Income Tax Department may send you a notice for clarification when they detects significant increase in your Financial Transactions. As a group, we need to remain alert. ๐Ÿ”

The department is increasingly vigilant in its pursuit of unreported income. Every transaction over a certain threshold in value must now be reported using PAN. Property registrars and financial institutions with whom you have dealings, such as your bank, insurance, mutual fund company, and credit card company, send the report to the tax department on your behalf with information about your big transactions. ๐Ÿ’ณ

Income tax department list of High value transactions

Transaction Type Threshold Value Reporting Entity
Savings ๐Ÿ’ฐ & Current Account Deposits 10 Lac (savings) or 50 Lac (current) Banks ๐Ÿฆ
Fixed Deposits ๐Ÿ’ณ 10 Lakh Banks ๐Ÿฆ
Foreign Currency Dealings ๐Ÿ’ฑ 10 Lakh Banks/Foreign Exchange Dealers ๐Ÿ›๏ธ
Financial Instruments ๐Ÿ’น 10 Lakh Financial Institutions ๐Ÿ›๏ธ
Credit Card Payments ๐Ÿ’ณ 1 Lakh (cash) or 10 Lakh (electronic) Credit Card Companies ๐Ÿ’ณ
Real Estate Transactions ๐Ÿ  30 Lakh Property Registrars ๐Ÿ“

Savings & Current Account Deposits

Banks are required by law to report to the Tax Authorities any account holders whose annual deposits exceeds total more than 10 Lac in savings account or 50 Lac in current accounts

Fixed deposits

If you deposit Cash more than 10 lakh into an Fixed Deposit account, then bank is required to report this information on form 61A, a statement of financial transactions to Tax Authorities

Foreign Currency Dealings

Any transactions made in Foreign Currency totaling Rs.10 Lakh or more via a debit card, credit card, SWIFT Wire transfer, or traveler’s check in a financial year must be reported to the tax authorities.

Financial Instruments Stocks, ETFs, Debentures, and Bonds

If you invest more than 10 lakhs in mutual funds, bonds, equities, or debentures in a financial year, you must declare it. The Income Tax Department informed of these Deals. Your AIS statement will show these purchases & sales also in FORM 26-A under SFT

Credit Card Payments

Annual credit card bills of Rs. 1 lakh or more paid in cash or Rs.10 lakh or more paid by any electronic mode reported to Income Tax Authorities

Buying and Selling Transactions in Real Estate

All the property registrars and sub-registrars across the country are obligated to notify the tax authorities if transaction of immovable property that exceeds 30 lakh

Should i Worry About These Transactions ?

If you engage in the kinds of transactions described above, that doesn’t mean you’ve committed a crime; since it’s your money, you can do whatever you want with it; however, you are required to report your income & its sources to the income tax department; otherwise, they will send you a notice asking for clarification. Trust me Penalty is very huge if you found guilty in undisclosed income & sources.

Frequently Asked Questions (FAQs)

What are high-value transactions that could attract an income tax notice?

Cash transactions of large value, foreign currency dealings, large credit card payments, buying and selling property, investing in financial instruments.

Do I need to inform the income tax department about high-value transactions?

Yes, if the value of the transaction exceeds a certain limit, you must inform the income tax department.

What is the threshold for savings and current account deposits to be reported to the income tax department

Banks must report annual deposits over 10 lakhs in savings accounts or 50 lakhs in current accounts.

Do I need to declare my investment in mutual funds and stocks to the income tax department?

Yes, if you invest more than 10 lakhs in a financial year, you must declare it, and the income tax department is also Informed by Mutual Fund Houses.

Should I be worried if I engage in high-value transactions?

No, as long as you report your income and its sources to the income tax department, you don’t need to worry.

What transactions related to real estate must be reported to the income tax department?

Any transaction involving immovable property exceeding 30 lakhs must be notified to the tax authorities by the property registrar or sub-registrar.

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