Learn about the reasons if you got a notice from the Income Tax department.

If a person engages in high-value cash transactions, he or she is likely to receive a notification from the Internal Revenue Service. Banks, mutual fund houses, brokerages, and property registrars are among the several cash-related transactions. If the value of the transaction exceeds a certain level, it must be reported to the income tax department.

The Internal Revenue Service has reached agreements with a number of government agencies to access financial information of people who engage in high-value transactions but fail to mention them on their tax returns. Amit Gupta, MD of SAG Infotech, gives several examples of transactions that may have resulted in a notice from the income tax Department.

“The maximum amount of cash that can be deposited in a bank FD is INR 10 lakh. A bank depositor making a cash deposit in a bank FD account is urged not to exceed the INR 10 lakh limit. The Central Board of Direct Taxes (CBDT) has mandated that banks disclose individual deposits in one or more fixed deposits that exceed the prescribed limit “According to Amit Gupta.

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Amit Gupta goes on to say, “A bank account’s cash deposit limit is INR 10 lakh. The income tax agency may issue an income tax notice if a savings account holder deposits more than INR 10 lakh in a financial year. In the meantime, any cash deposits or withdrawals in a bank account that exceed INR 10 lakh in a financial year must be reported to the tax authorities. The limit for current accounts is INR 50 lakh.”

Paying credit card bills

“Payments of INR 1 lakh or higher in cash against credit card debts should be disclosed, according to the CBDT. In addition, if a payment of INR 10 lakh or more is made to settle credit card bills in a financial year, the amount must be reported to the tax authorities. The income tax that applies to credit card transactions is, however, the most pressing worry. You must ensure that you do not exceed your credit card spending limit, as the tax authorities maintains track of credit card transactions because your credit card information is connected to your PAN Card, allowing the government to readily monitor your spending online. Any significant transaction should be disclosed when submitting an ITR. If you use credit cards for high-value purchases, make sure to mention them on Form 26AS when completing your ITR to avoid receiving a letter from the IRS “He made the suggestion.

The purchase or selling of a moveable asset

“Any investment or sale of immovable property for an amount of INR 30 lakh or more must be reported to the tax authorities by the property registrar. Your Form No. 26AS should be used to report the property purchase or sale. If you are buying or selling a home for more than INR 30 lakhs, you are also on the radar of the Income-Tax Department. The Internal Revenue Service may investigate whether the buyer disclosed the money on his or her tax return “Added he.

Cash transactions involving stocks, mutual funds, debentures, and bonds

According to Gupta, “Certain individuals who engage in mutual funds, stocks, bonds, or debentures must guarantee that their cash transactions do not exceed INR 10 lakh. The Internal Revenue Service (IRS) has developed an Annual Information Return (AIR) account of financial transactions to help taxpayers track high-value transactions. On this basis, tax officials will collect information about unusually high-value transactions in a given fiscal year. Check the AIR section of your Form 26AS if any expense or transaction has been marked as a high-value transaction. The high-value financial transactions are detailed in PART -E of Form 26AS.”

Sale of foreign currency and indulging expense of foreign exchange

“Any individual who receives an amount of INR 10 lakh or more in a financial year for the sale of foreign currency, as well as any credit in such currency through a debit card or credit card, or insurance of traveller’s cheque, draught, or other instruments, should notify the income tax department,” Amit Gupta concluded.