Even in India's wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital era, many individuals still prefer to pay with cash. Large cash transactions frequently draw the attention of the Income Tax Department, even if minor cash transactions are usually permitted. It's critical to comprehend the regulations controlling high-value cash transactions to prevent scrutiny or fines. Five different transaction types that may result in an income tax notification are described below.
1. Making a bank account deposit
According to Central Board of Direct Taxes (CBDT) regulations, banks must notify the Income Tax Department of any deposits of Rs 10 lakh or more made in one or more accounts within a fiscal year. This can lead to a question where you would have to provide the money's source.
2. Making a cash deposit into a fixed deposit (FD)
Cash investments in fixed deposits over Rs 10 lakh in a fiscal year are also subject to inspection, just like ordinary deposits. The bank notifies the Income Tax Department even if the sum is dispersed over many FDs, raising possible concerns regarding the funds' source.
3. Cash Exchanges in Real Estate Transactions
Buyers of real estate should use caution when making cash transactions. The property registrar notifies the Income Tax Department of every cash transaction involving the acquisition of property that totals Rs 30 lakh or more. This can result in a notification asking you to provide the source of such a substantial amount.
4. Using Cash to Pay Credit Card Bills
The Income Tax Department may request an explanation of the source of funds if you pay off credit card debts totaling at least Rs 1 lakh in cash. Furthermore, regardless of the method of payment, you may come under examination if your total credit card bill payments in a fiscal year surpass Rs 10 lakh.
5. Purchasing Bonds, Debentures, Mutual Funds, or Shares
Red flags are also raised by substantial cash investments in financial instruments such as bonds, mutual funds, shares, or debentures. The Income Tax Department is automatically notified if the total sum in a fiscal year is above Rs 10 lakh, and they may then look into the source of the monies.
In conclusion
It's crucial to maintain transparency in your transactions and make sure that your cash dealings stay within the allowed limits to prevent needless inconveniences and legal issues. For high-value transactions, always keep accurate records and be prepared to explain the source of cash. Making the switch to wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital or check payments for substantial sums will help you stay out of the Income Tax Department's sights.
1. Making a bank account deposit
According to Central Board of Direct Taxes (CBDT) regulations, banks must notify the Income Tax Department of any deposits of Rs 10 lakh or more made in one or more accounts within a fiscal year. This can lead to a question where you would have to provide the money's source.
2. Making a cash deposit into a fixed deposit (FD)
Cash investments in fixed deposits over Rs 10 lakh in a fiscal year are also subject to inspection, just like ordinary deposits. The bank notifies the Income Tax Department even if the sum is dispersed over many FDs, raising possible concerns regarding the funds' source.
3. Cash Exchanges in Real Estate Transactions
Buyers of real estate should use caution when making cash transactions. The property registrar notifies the Income Tax Department of every cash transaction involving the acquisition of property that totals Rs 30 lakh or more. This can result in a notification asking you to provide the source of such a substantial amount.
4. Using Cash to Pay Credit Card Bills
The Income Tax Department may request an explanation of the source of funds if you pay off credit card debts totaling at least Rs 1 lakh in cash. Furthermore, regardless of the method of payment, you may come under examination if your total credit card bill payments in a fiscal year surpass Rs 10 lakh.
5. Purchasing Bonds, Debentures, Mutual Funds, or Shares
Red flags are also raised by substantial cash investments in financial instruments such as bonds, mutual funds, shares, or debentures. The Income Tax Department is automatically notified if the total sum in a fiscal year is above Rs 10 lakh, and they may then look into the source of the monies.
In conclusion
It's crucial to maintain transparency in your transactions and make sure that your cash dealings stay within the allowed limits to prevent needless inconveniences and legal issues. For high-value transactions, always keep accurate records and be prepared to explain the source of cash. Making the switch to wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital or check payments for substantial sums will help you stay out of the Income Tax Department's sights.
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