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The Income Tax department keeps a tab on various types of transactions done using cash. Thus, making a high-value transaction in cash can lead to problems.
In this article, we will discuss five such types of cash transactions that can cause problems, when you file your Income Tax Returns (ITR).
The Income Tax department has become vigilant against cash transactions. Various financial entities, like Mutual Fund houses, Banks, etc., along with the Income Tax department, have tightened the rules on cash transactions. They allow people to transact in cash up to a certain limit. The Income Tax department will be notified, if an individual makes a cash transaction above the specified limit.
In case an individual makes a high-value cash transaction, he/she might receive a notice from the Income Tax department. Therefore, it is recommended to be mindful of high-value transactions, whilefiling ITR.
Cash transactions that are under the radar of the IT Dept.:
Payment of a Credit Card Bill
Payment of Rs 1 lakh or more in cash and Rs 10 lakh or more, by any mode, towards yourCredit Card bills will be reported, as per the Central Board of Direct Taxes (CBDT) norms.
Bank Fixed Deposit (FD)
The specified limit for cash deposits in an FD is Rs lakh. The CBDT has announced that in case a person makes cash deposits exceeding Rs 10 lakh in an FD, the Bank needs to report it.
Cash Deposits in Bank Accounts
The cash deposit limit, in the case of Savings Accounts, is Rs 10 lakh. If a person deposits more than Rs 10 lakh in a financial year, then the Bank will report it. However, for Current Accounts, the limit is Rs 50 lakh.
Real Estate Transactions
If a person purchases or sells any real estate property that is valued at Rs 30 lakh or more, then the property registrar will report the sale or purchase transaction of the property.
Investments in Shares, Bonds, Mutual Funds, and Debentures
In case a taxpayer makes cash transactions of more than Rs lakh in a financial year in Shares, Bonds, Mutual Funds, or Debentures, then it will be reported to the Income Tax authorities.
Don’t violate cash transaction rules.
Violating any cash transaction rule can cause trouble for you. Therefore, it is important to understand these rules and avoid such high-value cash transactions.
If you want to file your ITR conveniently, then you should considerNet Banking with ICICI Bank. You can file your ITR in a few easy steps. Log in with your User ID and Password. Go to ‘Payments and Transfers’. After that, go to ‘Manage your Taxes’. Click on ‘Income Tax e-Filing’. After that, you will be redirected to the Income Tax India website.
“The user needs toverify all the facts, law and contents with the text of the prevailing statutes and seek appropriate professional advice before acting on the basis of any information contained herein, as the taxation implications may vary depending upon the facts in each case/interpretation by tax authorities, and the tax laws are subject to change from time to time. ICICI Bank Ltd expressly disclaims any liability to any person, in respect of anything done or omitted to be done by any such person, by placing reliance upon the contents of this write-up.”
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