Income Tax Department tracks these high value transactions.

Hello everyone, today I am going to give you a very important information that will definitely guide you to know that what are the reasons because of which you may receive notice from the Income Tax Department. As per now, Income Tax Department applies the logic that a person can hide their incomes but cannot hide their expenditures & investments due to digitization. If Income Tax Department is not able to cross-verify such information with your income tax return or if you exceed certain limit of the  transactions mentioned below, for the concerned financial year then notice will be sent to you by the Income Tax Department (as per the case may be)

 

In this post, in a very simple language I will try to tell you some of the high value transactions which are tracked by the Income Tax department. Before that I would like you to know that what is meant by financial year. Financial year refers to the time period from 1st of April to 31st March, for example 1/4/2020 to 31/3/2021 is one complete financial year. So do read it with patience & don't forget to share this post with your friends, colleagues & family members.

The transactions are as follows:

Transaction related with Bank accounts:

1) In a financial year, if a person in total either deposits/withdraws cash amounting to Rs.10 Lakh or more in/from their saving accounts (all saving accounts which a person have) then this information is sent to the Income Tax Department. In this scenario, I am telling you about the cash transactions only i.e. deposits/withdrawals done through net banking, RTGS, NEFT (digital mode) are excluded from this Rs.10 lakh limit.

2) In a financial year, if the cash deposits or cash withdrawals (including through bearer's cheque) aggregates to Rs. 50 lakh or more, from one or more than one current account of a person, then also the details are sent by the banking company, co-operative bank or Post Master General to the Income Tax department.

3) During a financial year, if payment is made in cash for purchase of bank drafts, pay orders or banker's cheque of an amount aggregating to Rs. 10 lakh or more, in this case, the details will be sent to the Income Tax Department.

4) The next transaction relates to the Fixed Deposits (FD) . If in a financial year, a person makes a FD of more than Rs 10 Lakh. then the details are sent to the Income Tax Department. The important thing to remember is that unlike the above three cases in which the details were tracked due to cash transactions only, here if you make FD even through the digital mode (i.e. NEFT, RTGS etc), then also the details will be sent. But if you are just renewing your old FD then no such information will be sent by the Bank.

5) For those people who use credit cards, 

 A person paying credit card bills (during a financial year) raised in respect of one or more credit cards issued to that person & if the amount aggregates to—

(i) Rs. 1 lakh or more in cash; or

(ii) Rs. 10 lakh or more by any other mode, 

then also the details of that person is sent by a banking company, co-operative bank or by the institution who has issued the credit card.

Other transactions

6) If a person buys or sells an immovable property (land, building, flat etc) for an amount of Rs. 10 lakh or more or has stamp value of Rs. 30 lakh or more, then the details of such transaction will be sent by the Registrar, Sub-registrar or Inspector General to the Income Tax Departments. The value of Rs 30 lakh refers to the Stamp Value or Registry value which is generally less than the actual market value of the immovable properties in India.

7) Now moving towards the next transaction, if a person purchases foreign currency of Rs 10 Lakh or more during a financial year then the details of such person is sent to the Income tax department by the Authorized person under Foreign Exchange Management Act, 1999.

8) This transaction covers a wider area & according to this, if you are purchasing goods or services by paying more than Rs. 2 Lakh in cash then the person to whom you have made the cash payment has to send your details to the income tax department (if that person to whom you have paid in cash is  liable for Audit u/s 44AB) 

These were some of the transactions about which you should be knowing. But hold on, besides these above mentioned transactions, there are many more transactions & if you want to read about them then you can click on the link which I am giving below. The provided link will take you to the Income Tax Department official website from where you can download the pdf and can read it thoroughly.

Disclaimer:- With this post, my motive is to make you all aware regarding those transactions, whose details are sent to the Income Tax Department and not to promote tax evasion. Sometimes unknowingly, people perform such transactions because of which they may get into trouble if the Income Tax Department is unable to cross-verify the information with their ITR for the concerned financial year. All the information provided in this post is based on the information provided by the Income Tax Department in the Statement of Financial Transaction (SFT) on their official website.

Link https://www.incometaxindia.gov.in/Tutorials/40.%20Understanding%20AIR.pdf