If you purchase in cash within a limit then there is no problem but after a certain limit you cannot make payment in cash. Doing this can prove costly for you because it will be difficult for you to respond when the income tax notice comes. Let us know at which places you need to be careful while making payment.
Income tax notice : The trend of digital payment has increased a lot in the country but many people still believe in doing transactions in cash. The main reason for this is that most of the families in the country rely on old methods like keeping more cash at home, buying gold jewelery by paying cash or making big purchases. A big reason for doing this is that people want to stay away from the radar of income tax. He does not want to come in the eyes of the department. Although if you purchase in cash within a limit then there is no problem, but after a fixed limit you cannot make payment in cash. Doing this can prove costly for you because it will be difficult for you to respond when the income tax notice comes. Let us know at which places you need to be careful while making payment.
1. Depositing cash in bank account
According to the rules of the Central Board of Direct Taxes (CBDT), if a person deposits Rs 10 lakh or more in cash in a financial year, then this information is also reported to the Income Tax Department. If you deposit more money than a certain limit, then you will have to tell the Income Tax Department where this money came from. That is, the department will ask you about the source.
2 Making fixed deposit through cash
Even if you make an FD by depositing cash above Rs 10 lakh, the Income Tax Department will ask about the cash source.
3 Buying property in cash after a limit
If you have made a cash transaction of Rs 30 lakh or more while purchasing a property, then the property registrar will inform this to the Income Tax Department. So the Income Tax Department will also ask you for information about where your money came from.
4 Credit Card Bill Payment
If your credit card bill is Rs 1 lakh or more and you pay it in cash, the Income Tax Department may still ask you about its source.
5 Buying shares, mutual funds, debentures or bonds
You may also receive an income tax notice if you use more than a limit amount of cash to buy shares, mutual funds, debentures or bonds. In such a situation, the Income Tax Department may ask you how you got so much cash.
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