Deposits into bank savings accounts are limited to a maximum of 10 lakh in currency.
The income tax agency is now very cautious when it comes to cash transactions. The rules governing cash transfers for the general public have been tightened in recent years. Financial organisations now permit cash transactions up to a certain amount. The Income Tax Department may issue a notice to the offender in the event of a minor violation.
An individual may receive a notice from the Income Tax Department if they engage in high-value cash trades. Banks, mutual fund companies, brokerages, and property registrars are a few of the various businesses involved in cash-related transactions. To acquire the financial records of people who engage in high-value transactions but fail to disclose them on their tax returns, the Income Tax Department has agreements with numerous governmental organisations.
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The managing director of a SEBI-registered income tax solution provider business listed the following as the top 5 cash transactions that could result in an income tax notice:
1] A bank FD cannot have cash assets worth more than Rs 10 lakh. Banks are required to disclose if a customer’s individual deposits in one or more fixed deposits exceed the established maximum, according to a Central Board of Direct Taxes (CBDT) announcement.
2] Deposits into bank savings accounts are limited to a maximum of Rs 10 lakh in currency. The income tax department may issue an income tax notice to a savings account holder who puts in more than Rs 10 lakh for a fiscal year. In the meantime, any cash deposits or withdrawals from a bank account that exceed the Rs 10,000 threshold in a fiscal year must be reported to the tax officials. The limit for current accounts is 50 lakh rupees.
3] Per CBDT regulations, payments of Rs one lakh or more made in cash against credit card bills must be submitted to the income tax division. Additionally, if a payment of at least Rs 10 lakh is made to clear off credit card debt in a fiscal year, the payment must be disclosed.
4] The sale or purchase of real estate property: The property registrar is required to notify the tax authorities of any investment in or sale of real estate worth at least Rs 30 lakh. Taxpayers are advised to record their cash transactions in Form 26AS when buying or selling real estate because the property registrar will undoubtedly report it.
5] Investment in shares, mutual funds, debentures, and bonds: Investors must make sure that their cash transactions in these investments do not surpass Rs 10 lakh in a fiscal year. To track taxpayers’ high-value cash transactions, the income tax agency has developed an Annual Information Return (AIR) statement of financial activities. Tax authorities will collect information.
