Utilizing cutting-edge technologies like artificial intelligence (AI) to keep an eye on taxpayers, the income tax department has increased vigilance to guarantee adherence to tax regulations. Certain expenses, whether they include cash transactions or luxury spending, may arouse suspicions and perhaps result in a tax notice. Here are some tips to help you avoid trouble.
 
Key Spending Limits to watch Out For

The Income Tax Department monitors several financial activities. Here are the limits that could invite scrutiny:

Large Cash Transactions

Limit: Deposits or withdrawals exceeding ₹10 lakh.
Example: A ₹15 lakh deposit without a valid source may prompt a notice.
Credit Card Payments

Cash Payments: Exceeding ₹1 lakh.
Digital Payments: Over ₹10 lakh.
High spending patterns inconsistent with declared income may be flagged.

Foreign Travel

Limit: Spending more than ₹2 lakh on international travel.
Example: A ₹5 lakh family trip abroad not disclosed in your ITR could attract attention.

Property Purchases

Limit: Buying property worth more than ₹30 lakh.
The department checks whether the source of funds is legitimate.

Stock Market and Mutual Fund Investments

Limit: Investments of ₹10 lakh or more.
Gains from investments must also be reported in your ITR.

Lavish Weddings or Events

Limit: Spending over ₹5 lakh on weddings or large events.
Extravagant expenses not aligned with declared income may lead to inquiries.

Cash Donations or Charity

Limit: Donations above ₹2 lakh in cash.
Non-disclosure of large donations may lead to tax scrutiny.
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Income Tax

SIBY JEYYA

17/12/2024 11:37 AM