Income Tax Department may send you notice for these 5 transactions; know them

With easy net accessibility and to save time, a large population in India has moved to online transactions. However, a sizeable population still opts for cash transactions since they find the traditional way more suitable to their habits.

However, many people who have no qualms about doing online transactions think that if they switch to cash transactions for large amounts, they won't come under the Income Tax Department's radar.

But they are wrong. If any transaction, online or offline, has an amount beyond a limit, not only the I-T department may notice it, but it may also send a notice.

In this write-up, we will tell you about some such transactions.

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, it is reported to the Income Tax Department.

This money may have been deposited in one or more accounts of the same account holder.

Since one is depositing more money than the prescribed limit, the Income Tax Department may ask you about the source of the money.

ALSO READ: What to do if Income Tax Department sends you a Section 143 (1) notice?

2- Depositing cash in fixed deposit

As the bank can inquire about cash deposits of Rs 10 lakh in a financial year in a bank account, it applies the same rule for transactions in fixed deposits (FDs).

If someone deposits over Rs 10 lakh in FDs in a financial year, the Income Tax Department may ask them about the source of the money.

3- Buying shares, mutual funds, debentures, or bonds

Many people find investing in shares, mutual funds, debentures, or bonds a good option.

Such investments may also develop the habit of saving money in an investor.

But if one uses a large amount of cash to buy shares, mutual funds, debentures, or bonds, it also alerts the Income Tax Department.

If a person makes a transaction of Rs 10 lakh or more in any of such investment options, its information reaches the Income Tax Department, which may ask you about the source of money.

ALSO READ: Have no investment? Including these allowances in your salary can help you save tax a great deal

4- Payment of credit card bill

Credit card use is common these days, and many times, the users pile up bills in lakhs.

But if your monthly credit card bill exceeds Rs 1 lakh and you want to pay it in cash, the Income Tax Department may still ask you about the source of your money.

At the same time, if you make a payment of Rs 10 lakh or more in a financial year by any means—online or offline—the Income Tax Department may question you as to where you got the money from.

ALSO READ: Five income tax rules introduced in 2023 that will impact you this year

5- Property-related transaction

Real estate prices in cities and Tier-2 cities are exorbitant, and large amount transactions are common.

But if you are making a cash transaction of Rs 30 lakh or more while purchasing a property, be aware of the Income Tax Department.

The property registrar will inform the I-T Department, which, in return, may ask you about the source of the money.