The Income Tax Department also keeps an eye on the transactions of common people. Notice may come on cash deposits of Rs 10 lakh+ in savings account, credit card bills of Rs 10 lakh+, property worth Rs 30 lakh+ and big foreign expenses. There is no need to worry if you can tell the source of the transaction.
New Delhi: Do not think that the Income Tax Department keeps an eye only on businessmen or very rich people. It is not so now. Bank accounts are linked to PAN card and the reporting system has become automatic, hence banking transactions of common people are also being monitored. If anything unusual is seen in your account deposit, withdrawal or card payment, you may get a notice from the IT department. Let us know about 10 such transactions, on which the Income Tax Department keeps an eye.
1. Cash deposit in savings account
If you deposit Rs 10 lakh or more ‘cash’ in your savings account in a financial year, then the bank will definitely inform the Income Tax Department. There is nothing wrong in this, but you should have proof of the source of this money. Such as papers of sale of property, proof of loan repayment or gift deed.
2. Credit Card Bill Payment
Be careful while paying your credit card bill. If you pay bills of Rs 1 lakh or more in ‘cash’ in a year, or pay bills of more than Rs 10 lakh through online bank transfer, then this information will be reported to the tax authorities. If your expenses do not match your reported income, an investigation may be conducted.
3. Depositing money by distributing it
To avoid the limit of Rs 10 lakh, even if you deposit Rs 2 lakh each in five installments, there will be no benefit. The system adds up all your transactions for the entire year. If cash transactions are more than your income, then suspicion may arise even if it is less than the limit.
4. Property transaction
While buying or selling a house or land, if the transaction price is Rs 30 lakh or more, then it is also reported. There is a high possibility of black money transactions in real estate, hence the authorities keep a close watch on it. Always make property transactions through check or bank transfer and show the full amount in the registry.
5. Closed accounts
If an account is not being used for months or years and suddenly a large amount is deposited or withdrawn from it, then it is immediately caught. There may be suspicion that someone is misusing your account. If you are reopening an old account and have inherited money or money from selling any property, then keep its papers safely.
6. Expenses abroad
If you buy foreign currency worth more than Rs 10 lakh in a year, send money abroad or spend through international credit cards, then this is also strictly monitored. Questions may be raised over large foreign expenses that do not match your income. Therefore, keep travel tickets, receipts of tuition fees and proof of sending money with you.
7. Interest income
The Income Tax Department has information about every rupee of interest received from savings account and fixed deposit (FD). Many people forget to show this small amount of income while filing returns, but the authorities can easily detect it.
Is there any need to be afraid?
If the department is keeping an eye on any of your transactions, it does not mean that you will be fined. If you can provide accurate details of your transactions, there is nothing to worry about. But, ignoring the notice may worsen the matter. Hiding income may result in penalty and interest ranging from 50% to 200% of the tax amount.