Income tax new rule: If you are going to buy a house, or are planning to buy in future, then you must know a simple rule of the realty sector.
You cannot do a cash transaction of more than 20,000 to buy a house. If you have spent cash within the limit of more than 20,000 in the purchase of property, then the income tax department can send you a direct notice.
There is a separate income tax rule on the use of cash in the dealing of fixed assets to curb black money. If cash is used for the purchase of property, it cannot be traced whether the cash was earned legally or illegally. Section 269SS of the Income Tax Act is applicable regarding this, it was implemented in 2015.
According to the Central Board of Direct Taxes (CBDT) rules, any transaction in real estate, even for agricultural land, if it is Rs 20,000 or above, can be done through account payee cheque, RTGS (real time gross settlement) or electronic Funds will have to be done through transfer only. If the cash transaction is above this, then under Section 271D of the IT Act, the cash taker will have to pay 100 percent of that amount as penalty by selling the property.
Not only this, according to Section 269T of the IT Act, if the property transaction is cancelled, then even after returning the amount, the transaction will have to be done through check if it is more than Rs 20,000. If the repayment is done in cash here too, you will be charged 100% penalty on the amount here too.
Two things to remember
Such farmers who are not taxed on any other income, they are selling their land, then they do not come under this section. Secondly, if any transaction is taking place for an immovable property worth Rs 30 lakh or more, then you will have to report it to the income tax authorities.