Spending more than ₹ 10 lakh? So immediately know these 5 strict rules of Income Tax! Tax on High-Value Transactions-StudyToper

If you have done a big transaction of ₹ 10 lakh or more in a year, then the Income Tax Department can be eyeing you. Nowadays the government has made strict rules on high-value transaction so that tax evasion can be stopped and every person has to give correct accounts of their income and expenses.

In such a situation, if you are also spending or investing a large amount, then it is important for you to know the rules of Income Tax. In this article, we will tell you which 5 strict income tax rules are applied on spending more than ₹ 10 lakh, which transactions are monitored, and what you should take care of.

Nowadays banks, government agencies and financial institutions give information about every major transaction to Income Tax Department. If you have spent an amount of ₹ 10 lakh or more in any form-whether it is a deposit in a bank account, the purchase of property, investment in mutual funds or share, or a payment of credit card bill-then all this is reported.

If you do not give correct information about these transactions in Income Tax Return (ITR), then you may also get notice. Therefore, it is important that you understand these rules and follow everything related to tax properly.

High-value transaction income tax rules: Overview Table

Is Ughana of high-value transactions? (What is high-value transaction?)

High-Value Transaction is one that has a large amount of transaction. Income Tax Department has set some limits, from which the transactions above reports banks and other institutions. For example, if you have deposited more than ₹ 10 lakh cash in your savings account in a year, then the bank will inform the Income Tax Department. Similarly, the limit is also fixed in fixed deposits, property, mutual funds, shares, credit cards etc.

These transactions are reported through Form 61A (Statement of Financial Transactions – SFT). This shows the government who has transacted the huge amount.

5 strict rules of Income Tax on spending more than ₹ 10 lakh

1. More than ₹ 10 lakh cash deposit in savings account

If you have deposited ₹ 10 lakh or more cash in your savings account in a year, then the bank will report it to Income Tax Department. By depositing more cash than this, your transaction can come in Scrutiny and you may have to tell the source of it.

2. More than ₹ 10 lakh deposits in fixed deposits

Even in fixed deposits, if you have deposited ₹ 10 lakh or more cash in a year, then the bank has to inform the Income Tax Department. If you do not show this amount in your tax return, then you may get notice.

3. Purchase or sale of property ₹ 30 lakh or more

If you have purchased or sold a property for ₹ 30 lakh or more, then the registry office will inform the Income Tax Department. It can also be scrutiny as to where you come from such a huge amount and have you paid it.

4. Share, Mutual Fund, Bond More than ₹ 10 lakh investment

If you have invested ₹ 10 lakh or more in a year in a year, mutual funds, bonds or debentures, then mutual fund houses, companies or brokers will inform the Income Tax Department.

5. Credit Card Bill Payment (₹ 1 lakh cash or ₹ 10 lakhs through other means)

If you paid a bill of ₹ 1 lakh or more of your credit card in cash in a year or paid ₹ 10 lakh or more with any medium (check, online etc.), then the bank will report it to Income Tax Department.

Income Tax Slab and Tax Rate

If your taxable income is more than ₹ 10 lakh, then you have to pay tax in 30% tax slab. Detail of tax slab below:

Apart from this, if your income is more than ₹ 50 lakh, then surcharge will also be imposed, which can range from 10% to 37% according to income.

How does the Income Tax Department keep an eye? (How Income Tax Department Tracks You?)

Information about every big transaction of yours is reached near Income Tax Department, because banks, registry offices, mutual fund houses, companies etc. report every major transaction through form 61A or SFT. Apart from this, data is also collected through Annual Information Return (Air) and Statement of Financial Transactions (SFT).

If any of your transactions goes above these limits, you can get an alert or notice via SMS or email from Income Tax Department. In such a situation, it is necessary to tell your income and expenses with source proof.

Cash transaction limit (cash transaction limit)

There are also strict rules on cash transactions under Section 40A (3) and Section 269ST of Income Tax Act:

• Section 40A (3): If you pay more than ₹ 10,000 cash payment to a person in a day, then this expenditure is not aloud for tax deduction.
• Section 269ST: In a day, receiving more than ₹ 2 lakh cash in a transaction or for an event is forbidden. Violation of this can lead to heavy penalty.

Why does income tax notice come on High-Value Transaction?

If you have done more transactions than the limit mentioned above and have not shown it properly in your ITR, then Income Tax Department can send you notice. On receiving the notice, you have to tell your income and expenditure with source proof. If you do not answer or do not give the information correct, then tax, penalty and interest may be charged.

What to do to avoid high-value transaction? (How to avoid income tax Trouble?)

• Always keep a record of your income and expenses.
• Whatever big transactions do, keep the source and proof.
• Show your income and investment correctly in ITR.
• Take care of the cash transaction limit, transfer large amounts from the banking channel itself.
• If the notice comes, answer it on time and give the necessary documents.

Income tax compliance portal er e-compatibility

Income Tax Department has provided Compliance Portal and E-Comple facility, where you can verify your High-Value Transaction information. If there is someone Mismatch, you can correct it and answer. This helps you to avoid notice and penalty.

FAQ: High-price transactions

Q1. Is it necessary to pay tax on every big transaction?
If your income is above taxable limit and you have done big transactions, then it is necessary to pay tax. Even if the income is not taxable, it is necessary to tell the source of transaction.

Q2. Can you do more than ₹ 10 lakh transactions in cash?
No, there is a limit of cash transactions under Income Tax Act. In a day, it is forbidden to take or give more than ₹ 2 lakh cash from a person.

Q3. Does the bank give information about every transaction to Income Tax?
Banks and other institutions give information about every high-value transaction to Income Tax Department.

Q4. What to do if the limit crosses by mistake?
If the limit has crossed by mistake, then show your income and expenditure in ITR with source proof and consult CA or Tax Experts if needed.

5 strict rules of Income Tax: Brief List

• More than ₹ 10 lakh cash deposit reports in the savings account.
• Fixed deposits have more than ₹ 10 lakh deposit report.
• Property purchases or sales are reported ₹ 30 lakh or more.
• Shares, mutual funds, bonds have more than ₹ 10 lakh investment report.
• Credit card bill payment (₹ 1 lakh cash or ₹ 10 lakhs from other means) is reported.

Conclusion

If you are doing any transaction of ₹ 10 lakh or more, then understand and follow the rules of Income Tax. The government is eyeing every big transaction and it is your responsibility to give correct information. Keep a record of your income, expenditure and investment and show everything correctly in ITR. Take care of the cash transaction limit and consult experts for any tax problem.

Disclaimer:
This article is only for information. The rules of Income Tax can change from time to time, so consult your chartered accountant or tax experts in any major transaction or tax problem. It is not a government scheme or scheme, but is a information based on the rules of Income Tax Department.