Income Tax Season: Do not make these 6 transactions otherwise you may receive income tax notice
Income Tax Season: Avoiding an income tax notice is easier if you are aware of certain financial transactions that attract the attention of the Income Tax Department. Tax evasion is a serious offense, and the department closely monitors large purchases and banking transactions. Here are six key transactions that can trigger an income tax notice if conducted within a financial year:
Fixed Deposits (FDs)
Depositing more than Rs 10 lakh in fixed deposits in a financial year can attract scrutiny from the income tax department. Ensure your FD transactions are within permissible limits to avoid any issues.
High-Value Savings Account Transactions
If you deposit Rs 10 lakh or more in your savings accounts, either in one account or spread across multiple accounts, you may receive an income tax notice. It’s crucial to keep your deposits below this threshold.
Purchase of Immovable Property
Buying immovable property worth Rs 30 lakh or more triggers a report from the property department to the income tax authorities. Ensure all your property transactions are properly documented and reported to avoid complications.
Investments in Mutual Funds and Debentures
Investing Rs 10 lakh or more in mutual funds, debentures, or bonds within a financial year can raise red flags. Keep your investment amounts within this limit to stay compliant with tax regulations.
Foreign Property Purchases
Acquiring foreign property or purchasing foreign currency worth Rs 10 lakh or more, including traveler’s cheques, forex cards, or transactions via debit or credit cards, will be reported to the income tax department. Be mindful of these transactions to avoid receiving a notice.
High-Value Expenditures
Spending more than Rs 10 lakh in a financial year, whether on luxury goods, travel, or other high-value items, can result in an income tax notice. Keep your expenses in check and maintain proper records to substantiate your spending.