These Income Tax High Value Transactions that May Trigger Notice from IT Department

Income Tax Department has taken many steps to curb tax evasion and bring transparency in the Taxation system. Nowadays, based on your Permanent Account Number (PAN), it is easy for the tax department to have a trail of activities done by the taxpayer. When the value of transactions done by an individual is not commensurate with the Income Tax Return (ITR) being filed by him, he is bound to receive the Tax Notice. Use of Credit Cards, international travel, and Purchase of Property are some of the situations. This article discusses the High-value transaction, which may trigger an Income Tax Notice. So be very careful when you are making these transactions.

Payment of Credit Card in Cash

Payment of 1 lakh rupees or more in cash or 10 lakh rupees or more by any other mode made to settle Credit Card Bill is reported by the banking company or co-operative bank to which the banking regulation applies in Statements of Financial Transactions (SFT).

Cash Deposits in a Savings Account

A banking company or co-operative bank to which the banking regulation applies is required to report Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.

Cash Payment for RBI Pre-Payment Instruments:

A banking company or co-operative bank to which the banking regulation applies is required to report Payments made in cash aggregating to ten lakh rupees or more during the financial year for the purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007).

Cash Deposits in a Current Account

A banking company or co-operative bank to which the banking regulation applies is required to report Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to fifty lakh rupees or more in a financial year, in or from one or more current accounts of a person.

Sale or Purchase of Immovable Property

Purchase or sale by any person of immovable property for an amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50C of the Act at thirty lakh rupees or more is required to be reported by Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.

Investment in Mutual Funds, shares Debentures, and Bonds in Cash

Cash Purchases of more than Rs. 10 Lakh of Mutual Funds, shares Debentures, and Bonds are reported in Statements of Financial Transactions (SFT).

Cash Purchase of Fixed Deposit or Recurring Deposit

Depositing more than Rs.10 Lakh in cash to invest in Fixed Deposit (FD) or Recurring Deposit (RD) is reported by Banks in SFT and can invite Income Tax Notice.

Sale And Credit of Forex Card or Sale of Foreign Currency

Receipt from any person for sale of foreign currency including any credit of such currency to a foreign exchange card or expense in such currency through a debit or credit card or through the issue of traveller’s cheque or draft or any other instrument of an amount aggregating to Rs. 10 Lakh or more during a financial year can invite Income Tax Notice.