Credit card cash payments: 6 high-value transactions that could land you an IT notice personal Finance

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The due date for filing income tax return (ITR) for financial year 2021-22 and assessment year or assessment year 2022-23 is July 31, 2022. Photo: Shutterstock

Filing your income tax return (ITR) is an important responsibility, but some financial activities can leave a bigger impact than others. The Income Tax Department uses information from a variety of sources to ensure tax compliance, and specific transactions may raise a yellow flag, leading to further investigation.

While cash is still commonly used in India, the IT department keeps a close eye on high-value cash transactions. This is because large-scale cash movement could be a red flag for income concealment or tax evasion. For example: Depositing large amounts of cash in your bank account, especially if you have no documented source of funds, can lead to a notice being sent. Receiving very large cash gifts may lead to inquiries by the IT department, especially if the source of the gift is unclear.

Ritika Nayyar, partner, Singhania & Co, explains some of the transactions that can trigger an income tax notice:


High-Value Cash Movements:

Either end of the spectrum may relate to cash deposits or withdrawals. Cash deposits or huge withdrawals of more than Rs 10 lakh for savings accounts and Rs 50 lakh for current accounts may raise questions about the source and purpose of the funds.

•Transactions related to real estate, whether buying or selling of property worth more than Rs 30 lakh, are reported. The tax department is interested in understanding the nature of the deal and the parties involved.


Investment Activities:

•Investing large amounts of more than Rs 10 lakh in stocks, mutual funds or bonds may raise suspicions if the source of these funds is not clearly evident, especially if it matches your declared income.

Although the department does not directly monitor credit card transactions, unusually high cash payments of more than Rs 1 lakh from credit cards or large loan payments of more than Rs 10 lakh using cash may require investigation. Is.

Exceeding these limits is not an automatic danger signal. The tax department wants a holistic picture. Here’s what else they consider:

•The validity of your high-value transactions depends on a clear and verifiable source of funds. Unexplained cash deposits may trigger inquiries.

•Any mismatch between the income declared by you and the information (about investments, transactions) reported by banks and financial institutions can lead to a notice. It is important to keep consistent records.


Main idea:

The Central Board of Direct Taxes (CBDT) has made it mandatory for banks to deposit an amount of Rs 10 lakh or more in one or more fixed deposits (other than those made by way of renewal of any other fixed deposit) when If it does, it is mandatory to report it. In a financial year.

CBDT has made it mandatory for all banks, including co-operative banks, to report cash deposits of Rs 10 lakh or more during a financial year in one or more accounts (other than current accounts and fixed deposits) of an individual.

Cash payments amounting to Rs 1 lakh or more should be reported as credit card dues. Additionally, if one makes a payment of Rs 10 lakh or more to settle credit card dues in a financial year (in any mode), these transactions will also have to be reported to the Income Tax Department.

Purchases of foreign currency aggregating up to Rs 10 lakh, including traveler’s checks and forex cards, debit or credit cards, will also have to be reported.

Financial institutions and firms issuing bonds or debentures will have to report receipts of sums aggregating Rs 10 lakh or more from any person acquiring such bonds or debentures in a financial year. Similar limits have been imposed for reporting purchases of shares and mutual funds.

It is mandatory for the property registrar to report the purchase or sale of immovable property worth Rs 30 lakh or more by any person to the tax authorities.

first published: 12 April 2024 | 10:38 am Is

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