9 High Value Transactions to avoid getting an Income Tax Notice

The tax authorities are scrutinizing not only offline but online transactions also. Therefore, Banks and finance institutions have to tell the tax department about those big transactions crossing a certain threshold. This includes every type of transaction and payment made via UPI and card, cash deposits, as well as withdrawals surpassing a specific limit.

The tax official to examine the reported income and expenses, uses advanced data analytics. It can build a comprehensive financial profile of an individual for verification of data from many sources such as bank statements, property records, investment details, and travel records. It can also collect data from external sources such as travel companies, stock markets, and employers in order to examine income sources and discover potential irregularities.

To curb tax evasion, such a level of scrutiny is really useful. It also enables the tax department to launch scrutiny assessments, resolve issues, and undertake investigations in order to gather evidence and recover taxes.

Common Cash Transactions that could attract the lens of the Income Tax Department:

• Depositing or withdrawing cash deposits of more than Rs.50 lakh from a current account in a financial year.
• Cash Deposit of over Rs.10 lakh into a fixed deposit in a financial year.
• In a financial year, purchasing and selling an immovable property worth more than Rs.30 lakh.
• Investments in stocks, mutual funds, debentures and bonds via cash worth more than Rs.10 lakh in a financial year.
• Cash payment exceeding Rs.1 lakh for credit card bills in a financial year.
• Payments of more than Rs.10 lakh were made for credit card debt using any method other than cash in a financial year.
• Sale of foreign currency worth more than Rs.10 lakh in a financial year.
• Cash transactions of more than Rs.10 lakh are used to invest in mutual funds, shares, bonds, or debentures.

If you are unsure about the proof of the source of funds, consult a financial expert. This would allow you to better manage your cash and prevent you from coming under the lens of the IT department.