As the new financial year looms, taxpayers are advised to exercise caution in their financial transactions, as certain activities may attract the attention of the Income Tax Department. Whether engaging in online or offline transactions, exceeding specified limits could result in the issuance of an income tax notice. In this article, we delve into the thresholds set for various transactions, shedding light on when the Income Tax Department might initiate inquiries.
- Depositing Cash into Bank Account:
- CBDT rules mandate reporting to the Income Tax Department for cash deposits of Rs 10 lakh or more within a financial year. This reporting is compulsory for deposits across one or more accounts. Exceeding this limit may prompt the department to inquire about the source of the deposited cash, even if held in fixed deposits.
- Buying Shares, Mutual Funds, Debentures, or Bonds:
- While investing in financial instruments is common, using significant amounts of cash for transactions exceeding Rs 10 lakh raises red flags for the Income Tax Department. Such transactions trigger the department’s attention, leading to inquiries regarding the source of the funds involved.
- Property Transactions:
- Large transactions in real estate, particularly cash dealings of Rs 30 lakh or more, can attract the scrutiny of the Income Tax Department. Even if property registrars inform the department about such transactions, further investigations may be initiated, necessitating explanations regarding the source of funds.
- Credit Card Bill Payment:
- Although credit card usage is widespread, paying a monthly bill exceeding one lakh rupees in cash could invite inquiries from the Income Tax Department. Additionally, cumulative payments of Rs 10 lakh or more, whether made online or offline, within a financial year may trigger further investigations.
As the Income Tax Department intensifies efforts to combat tax evasion, individuals are encouraged to be vigilant with transactions surpassing the specified limits. Awareness of these thresholds can help prevent unexpected income tax notices and ensure compliance with regulations.
