Despite living in the age of digital payments, a lot of individuals still think that cash transactions are preferable and easier. To avoid being caught by the Income Tax Department, a lot of people also prefer cash transactions.
If you perform small-scale cash purchasing, it shouldn’t be an issue, but five high-value cash purchases might end up costing you money. As soon as the Income Tax Department learns about it, you can receive an Income Tax Notice.
1. Making A Bank Account Cash Deposit
The Income Tax Department is notified whenever an individual deposits Rs 10 lakh or more in cash within a financial year, as per the guidelines set forth by the Central Board of Direct Taxes (CBDT). One or more accounts may have received this money. The Income Tax Department may question you about the source of this money if you are depositing more than the allowed amount.
2. Making Cash Deposits Into Fixed Accounts
Similar concerns are raised about FDs as they are about depositing more than Rs 10 lakh into a bank account during a fiscal year. If, throughout a financial year, you deposit more than Rs 10 lakh in one or more FDs, the Income Tax Department may inquire as to where the money came from.
3. Paying The Credit Card Bill
You can still be questioned about the source of the money if your credit card bill is more than Rs 1 lakh or more and you pay it with cash. At the same time, the Income Tax Department may interrogate you about where you obtained the money if you make any kind of payment totalling Rs 10 lakh or more in any given financial year.
4. Large-Scale Real Estate Deal
If you paid cash for a home purchase totalling at least Rs 30 lakh, the property registrar would undoubtedly notify the Income Tax Department of this. Because this was such a large transaction, the Income Tax Department could inquire as to where you got the money.
5. Buying Shares, Mutual Funds, Debentures Or Bonds
The Income Tax Department is also notified when a sizable sum of money is utilized to purchase bonds, mutual funds, shares, or debentures. Information about a transaction above Rs 10 lakh is forwarded to the Income Tax Department. The Income Tax Department could question you about where you got the money in such a case.
