If you have more than Rs. 10, 00,000 in your saving bank account or you have spent more than Rs. 2, 00,000 through your credit card then be ready to get an income tax notice if there is a mismatch between the income you have declared in your income tax return and your investment or expenditure.
All Banks, mutual fund, credit card companies and other establishment covered under the scheme are supposed to report high value transactions to the IT department as per there directions. These establishments have your PAN number so it will not be a problem for IT department to track your transactions.
As per the recent development your all high value transactions are reported to IT department by the bank where you have saving account or Mutual Fund Company or any other person to whom this provision is applicable.
As per the income tax provision,
- Cash deposited aggregating to Rs. 10, 00, 000 or more in a year in any saving account of a person maintained in a bank
- Payments made in respect of a credit card aggregating to Rs. 2, 00,000 or more in the year.
- Receipt from any person of an amount of two lakh rupees or more for acquiring units of Mutual Fund.
- Receipt from any person for an amount of Rs. 5, 00,000 or more for acquiring bonds or debentures issued by a company or institution.
- Receipt from any person of an amount of Rs. 1, 00,000 or more for acquiring shares issued by the company.
- Receipt of Rs. 30, 00, 000 or more by a person from a purchase or sale of immovable property.
- Receipt from any person of an amount of amounts aggregating to Rs. 5, 00,000 or more in a year for bonds issued by the reserve bank of India
has to be reported to IT department by the establishments dealing with this matter on a yearly basis before the date of August 31. I.e. all banks, mutual fund, credit card establishments and other will be filling there annual information return yearly basis to IT department.
How to avoid income tax notices on high value transactions
- Fill your income tax return before due date
- Before filling your income tax return compare form 26AS with the income tax amount paid by you
- Disclose correct income that you have received during the year
- Track your high value transactions and keep a separate record for it. Incase it is asked by IT department then the high value transactions can be explained by you.