Tax Notice: From Real Estate deals to Credit Card Transactions; One can get Income Tax Notice 6 Times
All financial deposits and withdrawals made by individuals are tracked carefully by the Income Tax Department. To confirm tax scrutiny, the I-T Department uses data from several sources, some transactions prompt further investigation.
As an example, all high-value cash transactions are closely monitored by the tax department. Such as if a savings account holder receives a cash deposit of more than Rs.10 lakh in a single financial year, the department may be notified and asked to provide an explanation on the source of the funds.
Be aware that the Central Board of Direct Taxes (CBDT) mandates that banks report any cases in which a single depositor makes deposits totalling Rs.10 lakh or more over the course of a financial year into one or more time deposit accounts with the exception of deposits made through the renewal of another time deposit.
Excluding current accounts and time deposits, CBDT wants that all banks including cooperative banks to report deposits of cash worth Rs.10 lakh or more in a financial year across one or several accounts of an individual.
Bonds or debentures issued by financial institutions and firms are also being instructed to report receiving Rs.10 lakh or more from any individual in a financial year in order to purchase such securities. This is due to the possibility that significant cash transactions indicate concealed income, tax evasion, or black money, which should raise concerns.
6 times when your credit card transactions can invite an Income Tax Notice listed here:
1. For Savings accounts and Current accounts, cash deposits exceeding Rs.10 lakh and Rs.50 lakh respectively as well as large withdrawals may raise questions about where the money came from and how it was supposed to be used.
2. The tax authorities may also investigate real estate transactions that exceed Rs.30 lakh. The department may be interested in the details of the deal and the persons involved.
3. Investments in stocks, bonds, or mutual funds worth more than Rs. 10 lakh can come under investigation if their source is not obvious and doesn’t match your declared income.
4. Individual credit card transactions are not regularly tracked by the IT department. However, big debt settlements beyond Rs.10 lakh made in cash or cash payments exceeding Rs.1 lakh towards credit cards may be scrutinized and investigated. It is imperative to guarantee the legitimacy of noteworthy transactions involving open funding sources. Investigations may be prompted by unreported financial inflows.
5. If information from banks and declared income don’t match, a notice could be sent. Maintaining correct records is essential to preventing inconsistencies.
6. Any foreign exchange purchases totalling Rs.10 lakh, including traveller’s checks, forex cards, debit cards, and credit cards, must also be recorded.
