Insights & Research
CA Ajmal Muhajir
Head Consultant : Taxation & Audit
What is High Value Transactions?
High-value cash transactions beyond a specific limit are monitored by the Income Tax Department. Therefore, failing to mention such transactions in Income Tax Returns (ITR) filing may invite a notice from the authorities.
High-value cash transactions, including bank deposits, mutual fund investments, property-related transactions and share trading are under the vigil of the IT Department. If such transactions surpass the threshold limit, one should notify the I-T department to avoid getting a notice.
Also, while filing income tax return, it has been found that an earning individual commits some common mistake that can also lead to rejection of their ITR or invite an income tax notice.
In order to access the records of the individuals regarding the high-value transactions, there are certain government agencies and financial institutions with which the IT department has entered into agreements.
List of Transactions, if not reported in the ITR, can draw a notice from the IT Departments:
1.Savings and Current bank account deposits
Any transaction exceeding ₹10 lakh in a savings bank account and ₹50 lakh in a current bank account in a financial year should be disclosed to the I-T department.
Cash deposits in FD bank account exceeding ₹10 lakh need to be notified. By filing form 61A, a statement of financial transactions, banks will have to disclose the transactions if the total amount deposited in single or multiple fixed deposits exceeds the specified limits.
3.Shares, Debentures, Bonds and Mutual funds
As far as investments in mutual funds, stocks, bonds, or debentures are concerned, cash transactions should not exceed the limit of ₹10 lakh in a financial year. The Annual Information Return (AIR) statement contains details of financial transactions, and the tax authorities trace the high-value transactions through this.
Credit card bill payments above ₹1 lakh in cash and settlements above ₹10 lakh in a financial year towards credit card bills should be reported to the IT Department. The Income Tax department monitors all credit card transactions, and hiding any high-value transaction linked to credit cards could attract notice.
Sale of foreign currency amounting to ₹10 lakh or more in a financial year should be reported to the IT Department.
6.Purchase and sale of immovable property
The sale or purchase of any immovable property exceeding ₹30 lakh should be reported to the tax authorities by all the property registrars and sub-registrars across the country.
7.TDS Amount Error
The main problem with returns usually involves a mismatch of your TDS amounts. Sometimes your deductor or employer might have waited too long or committed a mistake in filing the TDS returns. In this case, ask your employer to amend the credit amount you got to the TDS amount.
Large-scale transactions like those mentioned above could cause issues with the income tax department. So mutual funds houses, banks, brokerages, and the real estate Registrar will need to notify the income tax department.
We suggest all taxpayers declare all earnings earned by the individual, including transactions with a high value on the income tax return. You must complete it before the deadline to avoid receiving any notice or penalties from income tax authorities.
In case of non-compliance or disclosure, the Income Tax will initiate penal actions. They will issue notices to take further action against the taxpayer who has defaulted.
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