These high-value cash transactions may result in income tax notices.

These high-value cash transactions may result in income tax notices.

Notice Regarding Cash Transactions: If you are a citizen, you should be aware of the following information. A single blunder can result in a notice from the tax division. In actuality, the government keeps track of all your financial transactions. If you perform more cash exchanges than the cutoff, you may receive a notice from the Internal Revenue Service.

In reality, the IRS must provide information to banks, mutual funds, businesses, and property owners if someone is involved in large-scale money transactions. If you do more money transactions than automated in this situation, you are making a mistake. Tell us about any cash transactions that may result in an Income Tax Department notice.

Purchasing a home

If you trade property worth 30 lakhs or more in cash, the Income Tax Department will be informed. In this case, the Income Tax Department has the right to question you about it. You can also get some information about where your money comes from.

 

Credit Card Bill Payment

You may encounter issues if you also deposit the Mastercard bill in real money. If you deposit more than Rs 1 lakh in cash in one go with your Visa bill, the Income Tax Department has the right to question you. If you pay a Visa bill for more than Rs 10 lakh in cash in a fiscal year, you must also provide the source of the money.

income tax
Investing in stocks and mutual funds

If you put money into the financial exchange or perform a lot of money exchanges in mutual funds, debentures, and securities, be cautious. If you invest more than Rs 10 lakh in these in a calendar year, the Income Tax Department will send you a notice.

 

Understanding the Section 54 capital gains tax exemption

In a money market account, make a cash deposit.

If you deposit more than Rs 10 lakh in fixed deposits in a year, the Income Tax Department may be able to learn more about your source of funds. You carefully deposit funds in an FD so that the personal expense division has a record of your transactions and you don’t have to deal with any issues.

Avoid putting cash in your bank account.

You might be addressed if you deposit Rs 10 lakh or more in cash in a year in fixed deposits. Aside from that, if you save a sum of 10 lakh or more in cash in any bank or cooperative bank in a year, you would fall under the Income Tax Department’s radar. In this case, deposit any amount online so that the division is aware of your transaction.

Understanding the Section 54 capital gains tax exemption

Understanding the Section 54 capital gains tax exemption

A capital gain is a profit gained from the sale of a home that is taxed. The house can be characterised as a short-term or long-term capital asset depending on the holding period.

If the property is held for 24 months or more, it is subject to a 20% tax rate, as well as any applicable surcharges and cess. If kept for a short period of time, such as less than 24 months, the profits are taxed at slab rates.

Let’s imagine a person needed to relocate for a variety of reasons, so he sold his previous home. He plans to buy another house with the funds from the sale.

The seller’s goal in this situation was not to make money from the sale of the old house, but to find another acceptable home. It would be a burden for the seller if he was required to pay income tax on capital gains deriving from the sale of the old residence in this scenario.

A seller can claim a tax exemption on the capital gain arising from the transfer of a residential home property under Section 54 of the Income Tax Act. Individuals and Hindu Undivided Families are the only ones eligible for this benefit (HUFs).

In addition, the transferred asset must be a long-term capital asset that has been held for at least 24 months. The taxpayer should have bought the second house within India either one year before or two years after selling the first.

Construction expenses incurred within three years of the sale of the first house would qualify if the assessee is building a residence.

GST: Interest on non-filing of GSTR-8 by pre-approved e-commerce operators is waived by the govt.

The amount of capital gain on the sale of a residential property or the amount spent in the purchase or building of a new residential property will determine the amount of Section 54 exemption. Any residual funds are subject to taxation.

Only one residential house property purchased or completed in India is eligible for the deduction. If more than one house is purchased or built, only one house will be eligible for the exemption under section 54. A house purchased outside of India is not eligible for an exemption.

The rollover of capital gains resulting on the transfer of a residential house into another residential dwelling is eligible for the section 54 exemption. However, constraints have been put in place to prevent exploitation of this benefit and to ensure that it is only available to long-term buyers.

If a taxpayer purchases or develops a home and claims an exemption under section 54, the benefit provided under section 54 will be revoked if the new home is transferred within three years of its acquisition or completion of construction.

Understanding modified and revised income tax returns

Understanding modified and revised income tax returns

 

A novel idea under the Income Tax Act is an updated return, which is a move toward voluntary compliance rather than a protracted adjudication process. Regardless of whether a return of income has been filed for a particular assessment year, an assessee has the right to file an updated return for that assessment year within 24 months of the end of that assessment year to correct errors, omissions, or mistakes made while filing the original return, or to furnish income details in cases where no return has been filed previously. The first year for which an updated return can be filed is now FY 19-20.

The catch is that the taxpayer must pay an additional tax in addition to the regular amount of tax, interest, and late fines. If the revised return is filed now for the year ending March 2021, for example, an additional tax of 25% on the total tax (including interest and late fees) must be paid.

 

If the return is filed on or after April 1, 2023, an extra tax of 50% on the total tax (including interest and late fines) must be paid for the same year (FY20). This amended return window is accessible for up to 36 months after the end of the fiscal year.

 

Read More: GST receipts fell 16% in May, to Rs 1.41 lakh crore, from record highs a month before.

 

The overall tax on income could rise to 66 percent as a result of the additional taxes, but through voluntary compliance, the department’s punitive actions can be avoided. A high tax rate serves as a reminder to taxpayers to file their taxes as soon as possible. Higher taxes will be levied if you file late or incorrectly.

 

A revised return differs from an updated return. Even if the first return results in a higher refund or losses, or a lower tax liability, it can be changed. An revised return, on the other hand, cannot be filed if it increases the loss or refunds. There are no additional taxes for the updated return, which is another significant distinction, whereas updated return always comes with additional taxes. 

It’s likely that using a few images to describe the requirements of update returns will be beneficial. On August 30, 2021,

 

Arvind filed his IT return for the fiscal year ending March 2021. Now he realises that an interest payment of Rs 90,000 was not included in his tax return. Is it possible for him to file a revised tax return? Yes, he must pay the required taxes and file the return by March 2024.

Bhaskar has yet to file his IT tax return for the fiscal year 2020-21. He must record a loss of Rs 2 lakh from futures and options trading. Is he allowed to file?

No, you can’t file any revised returns that result in a refund. Similarly, if the department initiates a search or survey, an amended return cannot be filed in those situations as well. 

 

Those who are entitled to file UR returns can use Form ITR-U to file returns for the fiscal year ending March 2020 and following years. For under-reporting or misreporting of income, a penalty ranging from 50% to 200 percent can be applied under the Income Tax Act. The taxpayer can avoid or lessen the above-mentioned penalties by filing an amended return and revealing extra income.