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Income Tax Department Is Tracking These 10 Transactions By You: Check How To Avoid Notice, Penalty
The Income Tax Department keeps a close watch on high-value financial transactions like large cash deposits, property deals, credit card payments, and big investments. Exceeding set limits without proper documentation can attract scrutiny or even penalties.
The Income Tax Department keeps a close eye on high-value transactions to track unreported income and curb tax evasion. Many of these activities seem harmless but could draw scrutiny if they cross certain limits. If you want to stay on the safe side, here are 10 financial moves that could trigger an alert from the IT department.
Cash Deposits in Savings Account
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If you deposit Rs 10 lakh or more in your savings account in a financial year, the bank is required to report it to the Income Tax Department. Frequent high-value deposits could raise questions about the source of funds.
Cash Deposits in Current Account
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For business accounts, the limit is higher. Depositing ₹50 lakh or more in cash during a financial year can attract IT scrutiny. Always maintain proper records and ensure your business transactions are transparent.
Paying Credit Card Bills in Cash
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If you pay Rs 1 lakh or more in cash toward your credit card bill, the bank will report it. Large cash payments may lead the department to question your declared income and spending habits.
High Credit Card Spending
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Even if you’re paying through online or banking channels, spending Rs 10 lakh or more annually on credit cards will be reported. Ensure that your spending aligns with your income tax filings.
Buying or Selling Property
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All property transactions worth Rs 30 lakh or more are reported to the IT Department. If you buy or sell property, make sure the deal value matches the amount reported in your income documents to avoid discrepancies.
Fixed Deposits (FDs)
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Investing Rs 10 lakh or more in fixed deposits can also attract attention. While there’s nothing wrong with it, ensure the source of funds is declared in your tax returns.
Foreign Travel or Forex Purchase
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Spending Rs 10 lakh or more on foreign travel or purchasing forex in a year is tracked under the Liberalised Remittance Scheme (LRS). The department may verify whether your declared income supports such expenses.
Investment in Shares or Bonds
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Investing Rs 10 lakh or more in mutual funds, stocks, or bonds is reported to the IT department. Always ensure your PAN is linked to such investments and the source of money is legitimate.
Cash Gifts Without Proof
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Receiving cash gifts worth more than ₹50,000 without proper documentation could lead to tax issues. Gifts from relatives are exempt, but gifts from others may be taxable.
Cash Received from One Person in a Day
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Accepting Rs 2 lakh or more in cash from a single person in one day is a direct violation of Section 269ST of the Income Tax Act. Always opt for digital or bank transactions for large payments.
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