How To Avoid Income Tax Notice : If you are making any high-value cash transactions, there is a strong possibility that you might get a notice from the Income Tax Department. The high-value transactions are invariably reported to the Income Tax Department if the value surpasses a particular threshold limit. The Income Tax Department has made arrangements with multiple government agencies to obtain financial transactions of individuals who indulge in high-value transactions but do not report them while filing their return.
Here are a few transactions due to which you may receive a notice from the Income Tax Department. If you want to know- “How to avoid income tax notice for your high value transactions?”, then please note down the threshold limits of high value transaction amount, given below and keep your transactions well below these limits:
Making high-value deposits in bank Fixed Deposits
Cash deposits in Bank Fixed Deposits should not exceed Rs 10 lakh. It is advised to a bank depositor making a cash deposit in a bank FD account that it must not surpass the Rs 10 lakh limit. The Central Board of Direct Taxes has announced that banks must reveal if individual deposits are more than the prescribed limit in one or more fixed deposits.
Making Deposits in Savings Bank Accounts
The cash deposit limit in a saving bank account is Rs 10 lakh. If a savings account holder deposits more than Rs 10 lakh during a financial year, the Income Tax Department may serve an income tax notice.
Making Deposits in Current Accounts
The cash deposit limit in a Current Account is Rs 50 lakh. If a current account holder deposits more than Rs 50 lakh during a financial year, the Income Tax Department may serve an income tax notice.
Paying Credit Card Bills
Payment of Rs 1 lakh or more in cash against credit card bills should be reported.Further,if a payment of Rs 10 lakh or higher is made in a financial year to settle credit card bills, the payment must be disclosed to the tax department. You need to check that you don’t cross your credit card spending limit. Income Tax Department keeps track of credit card transactions as your credit card details are linked with your PAN Card, and thus it can be easily monitored online by the government. Any big transaction should be revealed while filing ITR.
Purchase or Sale of an immovable property
Property Registrar is required to report any Purchase or Sale of immovable property for an amount of Rs 30 lakh or more to the tax authorities. In case, you are purchasing or selling property for more than Rs 30 lakh, then also you are on the Income Tax Department’s radar. The Income Tax Department may examine whether the buyer has reported the income in his/her tax return.
Shares, Mutual Funds, Debentures, and Bonds related cash transactions
If you want to invest in mutual funds, stocks, bonds, or debentures, then you must ensure that cash transaction in these investments do not exceed Rs 10 lakh. Income Tax Department has created an Annual Information Return to trace all such high-value transactions of taxpayers. Tax officials will gather details against unusual high-value transactions on this basis in a particular financial year.
Sale of Foreign Currency and indulging expense of Foreign Exchange
An amount of Rs 10 lakh or more in a financial year received by any individual for the sale of foreign currency should also be reported to the Income Tax Department.
If you are making the high value transaction and reporting the same to Income Tax Department by considering the same while filing your Income Tax Return, then it is OK. If you are making high value transactions and not reporting and not considering the same while filing your Income Tax Return, then you may get Notice from the Income Tax Department.
In other words, if you keep the threshold of the high value transactions within the prescribed limits, then you can avoid the Notice from Income Tax Department for your high value transactions irrespective of the fact whether you have considered or not considered the same while filing your Income Tax Return.
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