If you engage in high-value or large-ticket cash deals, the Income Tax Department may take legal action against you. The department maintains a close eye on several cash-related transactions; institutions like banks, mutual fund houses, brokerages, and registrars of properties will have to notify the tax department if they transact with cash more than the allowed amount. Here are some examples of high-value cash deals that could result in you receiving a warning letter from the income tax division.
Cash deposits into FDs: According to the Central Board of Direct Taxes (CBDT), banks must file a report if a person puts cash into one or more time deposits totalling at least Rs. 10 lakh in a fiscal year (excluding time deposits made through the renewal of other time deposits).
Cash deposits in bank accounts: The CBDT has made it mandatory for a bank or a cooperative bank to disclose cash deposits in one or more accounts (other than a current account and time deposit) of a person totalling Rs 10 lakh or more during a financial year.
Payment of credit card bills: According to CBDT, payments made in cash for credit card debt totalling Rs 1 lakh or more must be recorded. Additionally, if a person uses any method to pay off credit card debt for Rs 10 lakh or more in a fiscal year, these activities must also be reported to the tax authority.
Property transactions: “Purchase or sale by any person of property for an amount of Rs 30 lakh or more” must be reported to tax authorities by the property registrar.
Purchase of bonds, debentures, mutual funds, and shares: Businesses or organisations that issue bonds or debentures will be required to report receiving from any person an amount totalling Rs. 10 lakh or more in a fiscal year to acquire bonds or debentures. For reporting the acquisition of shares and mutual funds, a similar cap is established.
Purchase of foreign currency: Transactions totalling Rs 10 lakh or more in foreign currency, including traveller’s checks, forex cards, debit cards, and credit cards, are reported to the revenue department.
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