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Transactions Tracked by Income Tax Department

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Taxpayers must keep high-value transactions in mind when they file their income tax returns. Income tax departments use analytics to determine which individuals haven’t filed income tax returns (ITR) or underreported income despite doing high-value transactions. Following are the high-value transactions that need to be reported by the concerned authorities to the Income-tax department:

  • The bank or post office should report any deposits of more than INR 10 lakhs made by a person (other than current accounts and time deposits) to the information technology department in a financial year.
  • The bank/post office must notify the IT department of more than INR 10 lakh cash deposits that are made in the Time Deposit account of an individual in any one financial year.
  • Deposits in Current Accounts: All cash deposits or withdrawals aggregating to more than 50 lakh rupees in a financial year in one or more Current Accounts of an individual must be reported to the IT department by the banks.
  • If you purchase or sell the property for over Rs 30 lakh, the Income Tax Department will check whether the buyer has reported the income in their tax return. The property registrar must inform the tax authorities if you have purchased or sold the immovable property for more than 30 lakh. You need to report the purchase/sale transactions on Form No. 26AS. The Income Tax Department will check whether the buyer has reported the income in their tax return.
  • The persons will be required to inform the tax department if they receive cash payments exceeding INR 2 lakh to sell goods or services.
  • Banks will be required to report cash payments of INR 10 lakh or more for bank drafts or pre-paid instruments issued by RBI in a financial year.
  • Credit Card Bill Payments: If a person makes a Credit Card bill payment of more than INR 1 lakh per annum in cash mode (or) more than INR 10 lakh through a cheque / RTGS, the bank has to notify the Income Tax department.
  • A company must report any investment of INR 10 lakh or more from an individual or an investor to acquire bonds, debentures, shares, or mutual funds.
  • Investments in mutual funds, stocks, bonds, and debentures involving cash transactions Certain people who invest in mutual funds, stocks, bonds, or debentures must ensure that their cash transactions do not exceed Rs 10 lakh. The government has created an annual information return (AIR) statement to trace high-value transactions of taxpayers. On this basis, tax officials gather details about unusual high-value transactions in a particular financial year. If any expense or transaction has been listed as a high-value transaction, verify the AIR section of your Form 26AS. PART-E of Form 26AS includes information about high-value financial transactions.
  • The income tax department must be informed about any sales of foreign currency and any foreign exchange expenses that an individual incurs in a calendar year through the sale of foreign currency, the use of a debit or credit card, or travel insurance checks drafts, and other means.

Statement of Financial Transactions (SFT): Reporting Authorities (like banks, post offices, Registrars, companies) are required to intimate about high-value transactions to the Director of Income-tax by filing Form 61A called Statement of Financial Transaction (SFT). Through this Income-tax Department will know about the high-value transactions, and then it checks:

  • Whether such a person has filed a return of income or not,
  • If a return is filed, whether the income disclosed is true and taxes have been paid correctly or not.

At AJSH, we assist our clients in dealing with various income tax compliances, including income tax assessments, TDS returns, ITR filings, tax advisory, and other related services, by providing them adequate support and guidance from our end. If you have any questions or wish to know more about transactions tracked by the income tax department, kindly contact us.


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