Beware Income Tax Payers! These 10 High Value Transactions may Trigger IT Notices

Top Stories Beware Income Tax Payers! These 10 High Value Transactions may Trigger IT Notices Know the 10 High-Value Transactions That Could Trigger Income Tax Department Notices By Manu Sharma – On March 27, 2024 6:55 pm – 2 mins read The Income Tax Department closely watches High Value Transactions and issues Income Tax Notices to the suspicious ones.

It is important for Taxpayers to know the transactions to stay compliant and steer clear of Income Tax Notices. The Income Tax Department employs advanced techniques to detect disparities between disclosed income in Income Tax Returns (ITR) and actual financial transactions. Here are 10 high-value transactions that might raise red flags if not accurately reported in your ITR: 1. Cash Payments for Purchasing Demand Drafts or Prepaid RBI Instruments    Threshold Limit: ₹10 Lakh 2. Cash Deposits in a Savings Account    Threshold Limit: ₹10 Lakh annually (aggregate) and ₹2 Lakh per single transaction 3. Cash Deposit or Withdrawal from a Current Account    Threshold Limit: ₹50 Lakh per annum 4. Sale or Purchase of Immovable Property    Threshold Limit: ₹30 Lakh per transaction 5. Investments in Shares, Mutual Funds, Debentures, and Bonds in Cash    Threshold Limit: ₹10 Lakh per year 6. Cash Payment of Credit Card Bills

Threshold Limit: ₹1 Lakh per year 7. Credit Card Bill Payments (excluding cash) via cheque/digital methods    Threshold Limit: ₹10 Lakh (across all Credit Cards) 8. Sale of Foreign Currency    Threshold Limit: ₹10 Lakh 9. Sale and Credit of Forex Cards    Threshold Limit: ₹10 Lakh 10. Cash Deposits in Fixed Deposits (FD) or Recurring Deposits (RD)     Threshold Limit: ₹10 Lakh These thresholds aren’t arbitrary; they signify significant financial transactions that may not align with reported income. Failure to accurately disclose such transactions in your ITR could lead to inquiries or notices from the Income Tax Department. It’s important to note that this list is not exhaustive, as the Income Tax Department also collects data on various transactions through Statement of Financial Transactions (SFT) and other means.

To avoid complications, taxpayers should maintain meticulous records of all financial transactions, ensuring they match the income reported in their ITR. Seeking guidance from tax advisors or chartered accountants can offer valuable insights into accurately reporting these transactions and navigating potential audits or inquiries. Transparency and compliance are fundamental to a healthy tax system. By adhering to reporting requirements and accurately disclosing financial transactions, taxpayers contribute to a fair tax ecosystem while protecting themselves from scrutiny or penalties. Remember, honesty and accuracy pave the way for a smooth tax filing experience and foster trust between taxpayers and tax authorities. Stay informed, stay compliant, and ensure your financial records align with your ITR to minimize risks and discrepancies.

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