Income Tax Notice Alert: Key Cash Deposits and Transactions Under Scanner
Income Tax Notice Alert: The Income Tax Department is always watching. Here's a full breakdown of the key bank transactions that can land you an IT notice.
Income Tax notice for cash deposit
1. High cash deposit in savings account
The bank will inform the IT department if you deposit ₹10 lakh or more in cash into your savings account in one financial year. This can be in a single go or over multiple transactions.
2. Large Deposits in Current Account: For businesses using current accounts, the limit is higher. But if cash deposits or withdrawals cross ₹50 lakh in a financial year, it will grab the IT department's attention.
3. Credit card bill payment
You need to be careful when paying your credit card bills. The IT department gets alerted if you pay bills of over ₹1 lakh in cash in a year, or over ₹10 lakh through online/cheque payments in a year.
4. Fixed Deposits (FDs): If you start an FD by depositing more than ₹10 lakh in cash in a single year, the bank automatically reports it. However, there's no issue if you create an FD by transferring money already in your bank account.
5. Stocks, mutual funds and bonds
The tax department might send you a notice if you use more than ₹10 lakh in cash for investing in stocks, mutual funds, or bonds in a year.
6. Buying or Selling Property: When you buy or sell any property like land, a house, or a flat worth more than ₹30 lakh, the registrar's office will inform the tax department about the deal.
7. Foreign currency
If you buy foreign currency worth more than ₹10 lakh in a year for travel or other needs, it will be checked to see if it fits within your income bracket.
8. Demand Drafts (DD): Many people try to avoid the taxman by using cash to get a DD. But if you get a DD or a pay order using more than ₹10 lakh in cash in a financial year, it will raise suspicion.
9. Sudden big changes in bank account
If a large sum, say ₹20 or ₹30 lakh, suddenly appears in your account when your annual income is much lower (for example, ₹5 lakh), the tax department can ask you for the source of that money.
10. Not Filing Income Tax Returns (ITR): If you make any of the high-value transactions mentioned above but don't file your ITR, it's a direct invitation for a notice.
What should you do?
- Keep Proof: Always keep proper proof (bills, receipts) for every large transaction.
- File ITR: Even if your income is not taxable, it's safer to file an ITR if you've made big transactions.
- Link PAN: Make sure your PAN card is correctly linked to your bank account. Following these simple steps can help you avoid unnecessary legal trouble.
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