The Income Tax Department in India is ramping up its efforts to combat tax evasion and financial irregularities. With a focus on both cash and online transactions, individuals are urged to exercise caution to avoid receiving notices from tax authorities. Here are five types of transactions that may trigger immediate scrutiny:
1. Depositing Cash in Bank Accounts:
Under the regulations of the Central Board of Direct Taxes (CBDT), depositing cash exceeding ₹10 lakh in a financial year in a bank account prompts an automatic notification to the Income Tax Department. This applies even if the cash is deposited across multiple accounts linked to the same PAN and Aadhaar numbers. The department may inquire about the source of these funds, emphasizing the need for transparency.
2. Depositing Cash in Fixed Deposits:
Similar to bank accounts, depositing cash exceeding ₹10 lakh in a financial year in fixed deposits can attract the attention of the Income Tax Department. Notices may be sent to inquire about the income source or the origin of the funds. Providing accurate information is crucial to avoiding legal consequences.
3. Investing in Shares, Mutual Funds, Debentures, or Bonds:
While investments in shares, mutual funds, debentures, or bonds are common, transactions involving large cash amounts exceeding ₹10 lakh in a financial year are reported to the Income Tax Department. Investors should be aware that such transactions may invite scrutiny.
4. Credit Card Bill Payments:
The use of credit cards has become widespread, but individuals should be cautious when dealing with large bills. Monthly credit card bills exceeding ₹1 lakh, especially if paid in cash, may prompt inquiries from the Income Tax Department regarding the source of the cash. Similarly, online or offline payments totaling over ₹10 lakh in a financial year may be subject to scrutiny.
5. Property-Related Transactions:
In urban and Tier-2 cities where real estate prices are substantial, property transactions involving cash payments of ₹30 lakh or more may trigger alerts. Property registrars notify the Income Tax Department of such transactions, leading to inquiries about the source of the funds.
The heightened scrutiny by the Income Tax Department underscores its commitment to curbing tax evasion and ensuring transparency in financial transactions. Individuals are strongly advised to exercise caution, adhere to legal guidelines, and accurately report financial dealings to avoid unwanted scrutiny and potential legal complications.
