The government is keeping a close watch on high-value transactions with the help of data analytics and various agencies to prevent tax evasion. If a person is transacting large amounts in his bank accounts, investments or property purchases but is not fulfilling his income tax liability properly, then he is likely to get a notice from the department.
High-Value Transactions Income Tax Rule: The Income Tax Department has now become more vigilant than ever to prevent tax evasion and ensure compliance with tax rules. People who are either not filing Income Tax Returns (ITR) or showing less than their actual income may come under the surveillance of the department. For this, the department has started using data analytics and information received from various government agencies.
The department is especially keeping an eye on those individuals who have huge transactions in their bank accounts but are not paying taxes, recently the Central Board of Direct Taxes (CBDT) has directed self-reporting entities (SROs) like banks, post offices, cooperatives, fintech companies and mutual fund houses to provide detailed information of high-value transactions made in each financial year to the Income Tax Department by next 31 May.
What are high-value transactions?
Banks and other financial institutions provide information about large financial transactions above a certain limit to the Income Tax Department. The department keeps an eye on such transactions and if a person is spending excessively compared to his income but is not filing ITR, then he can be sent a notice.
Which transactions come under the surveillance of the Income Tax Department?
The department maintains a record of high-value transactions through Form 61A under the Statement of Financial Transactions (SFT) or Form 61B as a reportable account. These are based on data provided by the reporting entities.
Below is a list of transactions that the department pays special attention to:
Purchase of bank draft, pay order, bankers cheque or prepaid RBI instrument
If a person purchases a bank draft, pay order or other prepaid instrument by paying an amount of Rs 10 lakh or more in cash, then the bank or co-operative society will have to report it to the Income Tax Department through Form 61A.
Cash deposit in savings account
If a cash deposit of Rs 10 lakh or more is made in the savings account of a person, then the bank, co-operative bank or postal department will report it.
Cash deposit or withdrawal from current account
If an amount of Rs 50 lakh or more is deposited or withdrawn from the current account of a person, then the bank or co-operative bank will have to report it.
Purchase or sale of property
If a person buys or sells property worth Rs 30 lakh or more, then the property registrar or sub-registrar will have to be informed about this transaction.
Investment in shares, mutual funds, bonds and debentures
If a person invests Rs 10 lakh or more in shares, mutual funds, debentures or bonds in cash, then the concerned company or mutual fund trustee has to inform the Income Tax Department about it.
Payment of credit card bill in cash
If a person pays a credit card bill of Rs 1 lakh or more in cash, then the bank or cooperative society will have to be informed about it.
Payment of credit card bill by other means
If a person pays a credit card bill of Rs 10 lakh or more by any means other than cash, then also the bank or cooperative society will have to report it.
Foreign exchange transactions
If a person spends an amount of Rs 10 lakh or more by purchasing foreign currency, credit in forex card, foreign expenditure through debit/credit card or traveller’s cheque etc., then the authorized person under the Foreign Exchange Act (FEMA) has to report it.
Cash deposit in fixed deposit or recurring deposit
If a person deposits cash of Rs 10 lakh or more in a fixed deposit (FD) or recurring deposit (RD) account, then the bank, co-operative bank, Nidhi Company or non-banking financial institution (NBFC) has to report it to the Income Tax Department.
Most Read Articles:
- 8th Pay Commission: New big update regarding 8th Pay Commission, know when will the employees get the increased salary?
- 7th Pay Commission: Good news for central employees and pensioners! DA and DR will increase to 56% in March, know details
- Credit Card Link UPI: Link your credit card to UPI from home, know step-by-step guide
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
