What is the limit of cash deposit to avoid income tax notice? by TaxConcept

 

Cash deposits or withdrawals exceeding Rs 10 lakh (1 million) in a year in a savings account (except current accounts and fixed deposits) require reporting to the Income Tax department. Banks and post offices are responsible for reporting such transactions.

Cash deposits or withdrawals exceeding Rs 10 lakh (1 million) in a year in a savings account (except current accounts and fixed deposits) require reporting to the Income Tax department. Banks and post offices are responsible for reporting such transactions.

Certain high-value financial transactions in India can trigger scrutiny from tax authorities. Here is a checklist for you: 

1. Cash transactions into savings account:  ” With respect to cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person, statement of financial transaction is required to be furnished. Banking companies or cooperative banks along with the Post Master General are the prescribed reporting persons for cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts,” said Amay Jain, Senior Associate, Victoriam Legalis – Advocates & Solicitors.

2. Cash payments/Receipts: Cash payments or receipts exceeding Rs 2 lakh (0.2 million) for selling goods or services must also be reported. Businesses liable for audit under a specific tax section (Section 44AB) are responsible for reporting these transactions.

” Reporting person for the same shall be any person who is liable for audit under Section 44AB of the Income Tax Act. Such transactions along with other transactions set out in applicable rules, are to be reported to relevant reporting person/entity in accordance with Section – 285BA of the Income Tax Act, 1961 read with Rule-114E of the Income Tax Rules, 1962,” said Jain. 

3. High Credit Card Payments: Credit card payments exceeding Rs. 10 lakh (excluding cash advances) in a year might raise questions. Banks and cooperative banks report these transactions.

While credit cards offer convenience and flexibility, large payments may indicate substantial financial transactions that require proper documentation and reporting. Banking company or a co-operative bank would be the reporting person for such transactions,” said Jain. 

4. Real Estate Deals: Property purchases, sales, or transfers worth Rs. 30 lakh (3 million) or more require reporting. Registrars or sub-registrars of property deals are responsible for reporting these transactions.

“Whether it’s purchasing, selling, or transferring property, accurate reporting of these transactions is required to avoid penalties and inquiries from tax authorities. Inspector-General or Registrar or Sub-Registrar would be the reporting person for such transaction,” said Jain. 

How to Avoid Scrutiny:

  1. Maintain Records: Keep meticulous records of all financial transactions.
  2. Understand Reporting Requirements: Section 285BA of the Income Tax Act specifies reporting requirements for high-value transactions.
  3. Report on Time: Report high-value transactions to the Income Tax department with details like income source and taxes paid.
  4. Seek Professional Help: Consult tax professionals or financial advisors for guidance on tax implications and compliance.

“To navigate these potential pitfalls effectively, taxpayers should maintain meticulous records of all financial transactions. The relevant provisions of the Income Tax Act pertaining to the reporting of high-value transactions are outlined in Section 285BA. This section mandates the furnishing of a statement of financial transactions or reportable accounts by specified persons, including banking companies, cooperative banks, and financial institutions, to the Income Tax Department. Timely reporting of high-value transactions to the Income Tax Department is crucial, including details such as the source of income and applicable taxes paid,” added Jain.

By proactively disclosing high-value transactions and adhering to tax regulations, taxpayers can mitigate the risk of income tax notices and navigate the financial landscape with confidence. Compliance fosters transparency and trust in dealings with tax authorities, ultimately contributing to a smoother financial journey.

Comments

Post a Comment

Popular posts from this blog

Senior Citizen Train Ticket Discount: Government has issued a new statement regarding giving discount to senior citizens on train tickets, know the details here

Image
  Senior Citizen Train Ticket Discount: Once again a demand has been made in the Lok Sabha to give discount to senior citizens on train tickets. Senior Citizen Train Ticket Discount:  Railways has withdrawn the discount given to senior citizens on train tickets since the Corona period. However, from time to time there has been a demand to restore this concession given to senior citizens in trains. Even in the winter session of the Lok Sabha, some members raised the demand for increasing fare concessions and facilities for senior citizens traveling in trains. However, even before this, Railway Minister Ashwini Vaishnav has told in the Lok Sabha that during the train journey, every passenger is given an average subsidy of 53 percent on the train ticket. Apart from this, he also told who gets discount on tickets while traveling by train. Demand for discount in train tickets raised again During Zero Hour in the House, Janata Dal (United) MP Kaushalendra Kumar said that before the Corona ep
Read more

Cash Transaction Rules: Income tax rules on cash transaction between Husband-Wife and Son-Father, know rules

Image
  Cash Transaction Rules: Income tax keeps an eye on our every transaction. But is there any tax on cash transactions or can Income Tax send a notice? Or how much cash transaction can take place between you and your wife or between father and son? If you also have these questions in your mind, then let us know their answers… If you also transact money between father and son or between husband and wife, then this news is useful for you. Actually, every transaction of ours has an eye on income. In such a situation, a question arises in the minds of many people whether income tax notice can be received even on cash transactions? Let us know how much cash transaction you can do in your family. Income tax sends notice? According to tax experts, if you give money every month for household expenses or give money as a gift, then the wife is not liable for income tax. Both these types of amounts will be considered as the income of the husband. The wife will not receive any notice from the Incom
Read more

Have a Current/Savings Bank Account? Know the Cash Deposit Limits under Income Tax Act to avoid Penalties and Notices

Image
  Adhering to cash deposit and withdrawal limits is crucial to remain compliant with the Income Tax Act in India. This article aims to elucidate the various facets of cash-related regulations, encompassing savings and current accounts, fixed deposits, credit card bill payments, real estate transactions, and more.  Cash Deposit Limits in Savings and Current Accounts The Indian Income Tax Act imposes specific regulations on significant cash deposits in savings accounts. Individuals accumulating INR 10 lakh or more during a fiscal year must notify tax authorities.  For current accounts, this threshold is set higher at INR 50 lakh. Although not immediately taxed, financial institutions report transactions exceeding these limits.  Cash Withdrawal and TDS under Section 194N  Section 194N outlines TDS rules for cash withdrawals. A 2% TDS is levied on withdrawals exceeding INR 1 crore within a fiscal year. Non-filers face a 2% TDS on withdrawals over INR 20 lakh and a 5% TDS on amounts exceedi
Read more