High Value Transactions: Income Tax sends notices on these 10 high value transactions, be alert immediately

Income Tax Department Scrutiny: In today’s economic age, almost everyone has a bank account. This account is also monitored by the Income Tax Department. Therefore, it is important to read the Income Tax Department’s rules before any transaction. Otherwise, you may be served an immediate notice from the Income Tax Department.

Income Tax Department Scrutiny: Many people in the country have joined the banking sector. Bank services have reached rural areas through the Jan Dhan Yojana. Money is transferred directly from your bank account, and deposits or cash withdrawals are made from it. But did you know that the Income Tax Department also keeps an eye on your bank account? Therefore, be cautious before any transaction. In the era of digital payments and online banking, the Income Tax Department has increased its strictness on cash transactions.

The Income Tax Department has significantly strengthened its digital data analytics system over the past few years. Now, banks, mutual fund houses, post offices, and registry departments send SFT reports every year, which contain information about unusual or large transactions. This is intended to detect tax evasion and unknown transactions. Let’s explore the types of bank transactions that the Income Tax Department monitors.

1. Depositing more than ₹10 lakh in a bank

If you deposit ₹10 lakh or more in cash in a single financial year, the bank reports it to the Income Tax Department. This isn’t illegal, but you may be required to disclose its source. Therefore, it’s important to preserve receipts related to gifts, property sales, or business income.

2. Frequent or large cash withdrawals

Repeated or large cash withdrawals may alert the bank if large amounts are withdrawn from your account, or if there’s a sudden increase in cash flow. This could raise questions, especially if it doesn’t match your income, which could lead to further trouble.

3. Paying Large Credit Card Bills

If you have a low income but are paying large credit card bills every month, the department may suspect that your actual income is higher than what you’ve reported.

4. Multiple bank accounts and concealed interest

Attempts to conceal interest or transactions due to multiple accounts are now also brought to the attention of the department through PAN and Aadhaar linking.

5. Money from Undeclared or Unknown Sources

Large sums of money, such as loans from friends, household savings, or gifts, may be considered undeclared income if undocumented.

6. Property Deals Worth ₹30 Lakh or More

If you buy or sell a property valued at ₹30 lakh or more (whether at market rate or stamp value), the registrar reports it. The tax department then investigates where you received the money.

7. Foreign-related transactions or foreign currency expenditures

Expenditures of more than ₹1 million related to foreign travel, education, or forex card expenditures are subject to the department’s scrutiny.

8. Sudden large transactions in a dormant account

Sudden large deposits or transfers into an old account may be considered suspicious.

9. Discrepancies in interest or dividend information

Interest or dividends from mutual funds not disclosed in the ITR are detected by the department through its automatic matching system.

10. Transacting for Someone Else

If you are transacting from your account for a third person, this could be considered a benami or money laundering activity.

How does the Income Tax Department detect this?

All banks and financial institutions send SFT reports every year, which contain information such as cash deposits and withdrawals, property purchases and sales, major investments, and credit card expenses. The tax department links these reports to PAN and Aadhaar numbers to determine the actual account holder and their income.

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