In our country, after demonetization and GST there is a huge rise in digital payments. Nowadays, we are making big payouts and investments using various digital modes like RGTS, NTFT, net banking or by using Cheques and while doing such big payouts and investments we have to share our PAN card or Adhaar card.

In the last few years, the Income Tax department also updated itself and has changed its mechanism to trace tax evasion. To stop tax evasion, it has started working on the logic that a person can hide his income but can’t hide his spending and investments as these are becoming digital. So, the Income Tax department has developed a mechanism to trace such big payouts and investments.

Today we will discuss this mechanism and tell you about which financial transactions do the IT department trace and how the IT department gets information regarding these transactions.

Today we will discuss 10 financial transactions upon which the IT department put its eyes and we have to take care of that. Let’s discuss these transactions one by one.

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1.    Cash Transactions of more than ₹10 Lakhs in Saving Bank Account

If you withdraw or deposit cash of more than ₹10 Lakhs in your Saving Account during a financial year then your bank will give this information to IT Department. Note that here, we are talking about cash transactions i.e. you have deposit or withdraw more than ₹10 Lakhs through cash, here we are not talking about digital withdrawal or deposits, i.e., If you have done the transactions of more than 10 Lakhs using digital mode like net banking, RTGS, IMPS, etc, then this information is not given to IT department. Also, this transaction of ₹10 Lakhs can either be single or multiple i.e., If you have deposited or withdraw more than ₹10 Lakhs by depositing or withdrawing ₹2 Lakhs- ₹2 Lakhs, then this information will be given to the IT Department.

2.    Cash Transactions of more than ₹50 Lakhs in Current Bank Account

Similarly, in your Current Bank Account if you withdraw or deposit cash of more than ₹50 Lakhs during a financial year then the bank will give this information to the IT Department. Here this includes cash transactions only, i.e., cash withdrawal or deposit of more than ₹50 Lakhs and this transaction can be single or multiple, that means if you have deposited or withdraw more than ₹50 Lakhs by doing part payments in your Current account, the bank will give this information to IT Department.

3.    Fixed Deposit (F.D) of more than ₹10 Lakhs

If you have made an FD of more than ₹10 Lakhs during a financial year, then the bank will give this information to the IT Department. Note that whether you make FD either through cash or by any digital mode like RTGS, net banking, IMPS, etc, this information is given to the IT Department. If the FD is renewed i.e., it gets matured and you have renewed the FD, then information of FD renewal is not given to the IT department.

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4.    Payment of Credit Card bills

If you have credit card bills of more than ₹1lakh and pay this bill through cash during a financial year, then bank or credit card company will give this information to IT department and if you gave credit card bills through digital modes like net banking or IMPS then, in this case, this limit is ₹10 Lakhs. Therefore we can say that if you have used ₹10 Lakhs or more of a credit card during the financial year, then this information will be given to the IT department.

5.    Payment through Demand Draft of ₹10 Lakhs or more

During a financial year, If you have made the payment to a person through a demand draft of ₹10 Lakhs or more and you have made this demand draft through cash i.e., you have deposited the cash in bank and then make a demand draft then in this case bank will ask for your pan card number and this type of information will be given to IT Department by the bank.

6.    Investments of ₹10 Lakhs or more in Shares

During a financial year, if a person purchases shares of ₹10 Lakhs or more, then the concerned company will give this information to the IT Department. This purchase of shares can be done either through cash or by digital modes like net banking or RTGS etc, i.e., whether the purchase of shares of ₹10 Lakhs or more is done either digitally or through cash, this information will be given to IT Department.

7.    Investments of ₹10 Lakhs or more in Mutual Funds

During a financial year, if a person has invested ₹10 Lakhs or more in mutual Funds, then Mutual Fund Company will give this information to the IT Department. Note that whether the investment in mutual funds is done either through cash or by any digital mode like net banking or RTGS etc, this information will be given to the IT Department.

8.    Investment of ₹10 Lakhs or more in Foreign currency

During a financial year, if a person purchases the foreign currency of ₹10 Lakhs or more, then the foreign exchange dealer will give this information to the IT Department. So, If a person can spend ₹10 Lakhs or more on foreign travel then the IT Department should have this information so that it can verify if the person’s income justifies his this expenditure or not.

9.    Purchase of Immovable Property of more than ₹30 Lakhs

If you have purchased an Immovable Property like flat, house, building, etc of more than ₹30 Lakhs, then the registrar will give this information to the IT Department. Note that whether you make payment either through cash or by digital modes like cheques, net banking or RTGS, this information will be given to the IT department. Here we are talking about the registry value of the property. As we know the market value of Property is different from its registry value, in this case, information about the registry value of a property is given to the IT Department. Suppose you buy a property whose market value is ₹50 Lakhs but its registry value is ₹28 Lakhs i.e., the registrar will have information about ₹28 Lakhs, so this information is not given to IT department, but in case of registry value is greater than ₹30 Lakhs then this information will be given to IT Department.

10.  Make cash payment of ₹2 Lakhs or more on any Goods or Services

If you purchase goods or services of ₹2 Lakhs or more and make a cash payment, then the concerned person will have to give this information to the IT Department. Suppose you have purchased gold worth ₹2Lakh or more through cash payment, then it is the responsibility of the concerned jeweler to give this information to the IT department. Similarly, if you purchase a car through cash payment then the concerned car dealer should inform the IT department regarding this.

So these are some major 10 transactions towards which the IT department pays attention and IT Department gets information about them.

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Questions arise here that what the IT department do with this information? Will you get notice?

Answer to this question is that when the IT department gets the information regarding such transactions, it checks the Income-tax return filed by the person and check whether the income reported by the person in return justify his huge payouts and investments or not. If the person doesn’t file the return then it is considered that the annual income of the person is less or equal to 2.5 Lakhs and a person whose income is 2.5 Lakhs or less can’t make such huge transactions, so based on this IT Department send the Notice to the person. If the person files the income tax return, then the IT department checks his return and verify whether the income filed by person justify his big transactions or not. If it is justified then nothing is done but if it is not justified then the notice is sent to the person and the concerned person will have to give justification regarding all his source from which he has made such huge investments or transactions. If the IT department is not get satisfied then the income tax on his additional income and penalty will be charged from the person and If the IT department gets satisfied then no action is taken against the person.

Disclaimer: The Purpose of this article is not to promote tax evasion, but to make the user aware of the new updations happening in IT Department.

Source: https://www.incometaxindia.gov.in

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