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General
Say you are a person who makes high-value payments.
Then this blog is for you!
As per the latest income tax updates, there are certain high-value transactions that will prove very costly for you.
You must be aware that the Income Tax Department will keep an eye on these transactions and will send you a high value transaction income tax notice to your home!
So, here is the list of some high-value transactions that will prove you to pay the income tax amount over it.
So, what are high value transaction income tax?
Let it be any digital payment or can cash payment, these are certain high-value cash transactions that should be made without crossing eyes with the Income tax department.
You may already know that there is a limitation on the total amount that can be deposited in your bank account or while making a payment. For individuals below 60 years of age, it is Rs 2.50 Lakhs. For senior citizens with ages ranging from 60-80 years, the tax-free limit will be Rs 3 lakhs, and finally, for the supper-senior citizen aged above 80 years, it will be Rs 5 lakhs per annum. When this limit is exceeded, that's when you are liable to pay tax in India. That used to be the think!
But as per the new tax regime of the Income Tax Rebate made in Budget 2023, any individual having an annual income of Rs 7 lakh or below is not liable to pay the income tax. That being said, the tax regime, as the old law, is tax-free income, i.e., they are not liable to pay the tax. An individual with an annual income of Rs 7 lakhs are liable to pay the tax rebate of Rs 25,000
This is a general knowledge that everyone should be aware of. Yet, there are certain updates made in terms of income tax high value transactions that everyone may need to be made aware of.
Below are some cash transactions that will be proven to be high-value transactions in the eyes of the Income Tax Department.
Say you made a deposit of Rs 10 lakhs or more in cash or cheque into your bank account in a single or multiple transactions in a financial year. As per the rules of the Central Board of Direct Tax(CBDT) this payment made by the account holder will be reported to the Income Tax Department.
As this payment exceeds the prescribed tax-free limit, the account holder will receive the income tax notice asking for the income source. Thus said, a bank deposit of Rs 10 lakhs is a high-value transaction that will prove costly in the eyes of the Income Tax Department.
Similar to bank deposits, placing Rs. 10 lakh or more in fixed deposits within a year triggers reporting to the Income Tax Department. Be prepared to explain the source of these high-value transactions.
Being said, making Rs 10 Lakhs word fixed deposit will be marked as a high value transaction by the Income Tax Department, and will be asked to provide the income source for making such a huge deposit.
Purchasing property exceeding Rs. 30 lakh in a financial year is flagged by the Income Tax Department. This regulation helps track large cash movements and potential tax evasion.
As per the regulation, the registrar will notify you about this high-value cash transaction to the Income Tax Department, causing you to receive a high-value transaction income tax notice, and will be asked to provide the income source to prove that you earned this money.
Paying credit card bills exceeding Rs. 1 lakh in cash during a year raises a red flag. Exceeding Rs. 10 lakh using any other method also gets reported, requiring justification from the Income Tax Department.
This is one of the high value transactions that will prove you costly in the eyes of the Income Tax Department. Further a high value transaction income tax notice will be sent to your residence address asking you to provide the income source.
Investments exceeding Rs. 10 lakh in mutual funds, shares, or bonds within a year are reported to the Income Tax Department. This regulation helps monitor large investments and ensure proper income declaration.
Investing such a huge amount in mutual funds or buying bonds or shares will be marked as a high value transaction in the eyes of the Income Tax Department. In such a situation, you will be receiving an income tax notice asking you to provide the income source proving that you earned this amount.
All of these income tax high value transactions will surely be marked as a red flag by the authorities. So, it is necessary that you are aware of these high value cash transactions while making huge payments, and not be make yourself liable to pay the tax amount.
Let's say in case you received a notice or email from the Income Tax Department regarding the high value transaction. There are ways that you can comply with the income tax notice by providing the response to the e-campaign online.
Come. let's see how its done!
See weather you have received any SMS or e-mail from the Income Tax Department. If yes, follow the below steps to comply with the income tax notice:
Step 1: Visit the income tax e-filling website and login to your account.
Step 2: Click the "Pending Action" tab from the top bar. A drop down list appears from where you have to select the "Compliance Portal".
Step 3: Search for the e-campaign or the e-notice from the income tax regarding your high value transaction from the particular year.
Step 4: Select the information category. The one needed feedback will be marked as "Expected".
Step 5: Submit the response. You will be asked to mark any of the below response:
Information is correct
Information is not fully correct
Income is not taxable
Information relates to other PAN/year
Information is duplicate/included in other displayed information
Information is denied
And that how to you the income tax e-filling portal to comply the Income tax high value transaction notice received.
So, there you go folks. These are some of the high value transactions that will make you look costly in the eyes of income tax. Always remember that you have a valid income source when commencing such high-value transactions.
What are high-value cash transactions?
There are some cash transactions that will prove you costly in the eyes of income tax. Such payments are called high value transactions. Some of the high value transactions in the eyes of Icome tax department are, making 10 lakhs or more worth deposit in bank account, FD, credit card bill payment and depositing in mutual funds or buying bonds and shares.
What is the maximum amount for cash transaction?
Rs 2 lakhs is the maximum of cash transaction that an individual can make.
Is cash transaction above 2 lakhs illegal?
As per the income tax regime, any payment above 2 lakhs is prohibited and you will be receiving notice from the authorities, saying a high value transaction.
How to respond to high value transactions income tax Notice?
Say you received a high value transaction income tax notice, all you need to do is to login to the income tax e-filling and the compliance portal and give a relevant response to the e-campaign.
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