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Don’t do these 5 Transactions otherwise Income Tax can send you notice


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The Income Tax Department pays close attention to different financial activities to make sure people follow tax rules. They might send notices for five specific types of transactions that stand out. These transactions include putting a lot of cash in the bank, making big investments, or dealing with property.

When these transactions exceed certain limits, the tax department becomes interested and asks questions about where the money came from. This is done to keep things transparent and make sure everyone is following the tax rules. Let’s take a closer look at each of these transactions to understand why they catch the tax department’s eye.

The Income Tax Department may issue notices for the following five transactions:

1. Cash Deposits in Bank Accounts:
If an individual deposits Rs 10 lakh or more in cash within a financial year, the Central Board of Direct Taxes (CBDT) rules mandate reporting to the Income Tax Department. This includes deposits made across multiple accounts held by the same individual. The department may inquire about the source of such funds.

2.Cash Deposits in Fixed Deposits (FDs):
Similar to cash deposits in bank accounts, the Income Tax Department applies the Rs 10 lakh threshold for transactions in fixed deposits within a financial year. Deposits exceeding this limit may prompt the department to seek clarification on the source of the funds.

3.Investments in Shares, Mutual Funds, Debentures, or Bonds:
While investing in financial instruments like shares, mutual funds, debentures, or bonds is a common practice, large cash transactions (Rs 10 lakh or more) in these options alert the Income Tax Department. Investors may be questioned about the origin of the funds used for such transactions.

4.Credit Card Bill Payments:
If monthly credit card bills surpass Rs 1 lakh and the payment is made in cash, the Income Tax Department may inquire about the source of the funds. Additionally, any payment exceeding Rs 10 lakh in a financial year, regardless of the payment method (online or offline), may trigger scrutiny.

5.Property-Related Transactions:
Given the high real estate prices in urban and Tier-2 cities, cash transactions of Rs 30 lakh or more during property purchases can attract attention from the Income Tax Department. The property registrar notifies the department, leading to potential inquiries about the source of the funds.

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