Last Update: February 27, 2023, 13:23 IST
A person may receive a notice from the Income Tax Department if they engage in high value cash business.
Deposits in bank savings accounts are limited to a maximum of Rs 10 lakh in currency.
The Income Tax Department is now very cautious in the matter of cash transactions. The rules governing cash transfers to the general public have been tightened in recent years. Financial organizations now allow cash transactions up to a certain amount. In case of minor violations, the Income Tax Department can issue a notice to the offender.
A person may receive a notice from the Income Tax Department if they engage in high value cash business. Banks, mutual fund companies, brokerages and property registrars are just a few of the various businesses involved in cash-related transactions. The Income Tax Department has tied up with several government organizations to obtain financial records of people who engage in high-value transactions but fail to disclose them on their tax returns.
The Managing Director of SEBI-registered income tax solutions provider Business has listed the following as the top 5 cash transactions that may result in income tax notice:
1]A bank FD cannot have cash assets of more than Rs 10 lakh. As per the announcement of the Central Board of Direct Taxes (CBDT), banks are required to disclose if the personal deposit of a customer in one or more fixed deposits exceeds the established maximum.
2]Deposits in bank savings accounts are limited to a maximum of Rs 10 lakh in currency. The Income Tax Department can issue an Income Tax notice to a savings account holder who has invested more than Rs 10 lakh for a financial year. Meanwhile, any cash deposit or withdrawal from a bank account that exceeds the limit of Rs 10,000 in a financial year should be reported to the tax authorities. The limit for current accounts is Rs 50 lakh.
3]As per CBDT regulations, payments of one lakh rupees or more made in cash in lieu of credit card bills must be submitted to the Income Tax Department. Additionally, if at least Rs 10 lakh is paid to repay credit card debt in a financial year, the payment should be disclosed.
4] Sale or purchase of real estate property: The Registrar of Property is required to inform the tax authorities about any investment in or sale of immovable property worth at least Rs 30 lakh. Taxpayers are advised to record their cash transactions in Form 26AS while buying or selling immovable property as the Registrar of Property will undoubtedly report the same.
5] Investment in Shares, Mutual Funds, Debentures and Bonds: Investors should ensure that their cash transactions in these investments do not exceed Rs 10 lakh in a financial year. To track high-value cash transactions of taxpayers, the income tax agency has come out with the Annual Information Return (AIR) statement of financial activities. The tax authorities will collect the information.
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