But, experts say that taxpayers should not use the last date to file returns. While filing returns, you should not try to hide any kind of income.

Income should be based on high value transactions

Experts say that the Income Tax Department keeps track of every financial transaction of taxpayers. It especially keeps an eye on high value transactions. This means that if a person makes a high value transaction, but shows a very low income in the income tax return, then it is certain that he will come under the scrutiny of the Income Tax Department. The purpose of tracking high value transactions is to curb cases of tax evasion.

There is a special eye on the data of deposits in the bank

The Income Tax Department keeps an eye on high value transactions of taxpayers with the help of data received from banks and financial institutions. Vivek Jalan, partner, Tax Connect Advisory Services LLP, said that as per the rules, banks and other financial institutions are required to give information about many types of transactions to the Income Tax Department. For example, if a person deposits more than Rs 10 lakh in savings accounts in a financial year, then the bank has to give this information to the Income Tax Department.

The income tax department becomes cautious even if you withdraw more money

If a person withdraws or deposits more than Rs 50 lakh from the current account, the bank will have to give its information to the Income Tax Department. If a person pays a credit card bill of Rs 10 lakh (excluding cash) in a financial year, then the bank issuing the credit card will give its information to the Income Tax Department. If Rs 2 lakh comes into your account from the sale of goods or services, then the department will get its information.

These are the biggest weapons of the Income Tax Department

It is important for you to understand that the Income Tax Department does not track individual transactions of taxpayers. Instead, the department uses Annual Information Statement (AIS) and Form 26AS. Both these documents contain every transaction of taxpayers, big or small. For example, if you have bought or sold shares, then its information will be there in it. If you have traded in the stock markets, then its information will also be there in it.

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The post Income Tax On High-Value Transactions: How To Avoid Tax Notices? first appeared on Rightsofemployees.com.

Today we will answer both these questions. Personal finance experts say that according to the Income Tax Rules, the total cash deposit or withdrawal in a savings account during 1 financial year should not exceed Rs 10 lakh. Apart from this, according to section 269ST, a person cannot take a total of Rs 2 lakh or more in cash from a person in a single transaction or in transactions related to an event in a day. If there is a total cash deposit of more than Rs 10 lakh in all your savings accounts in a financial year i.e. between April 1 and March 31, then the Income Tax Department should be informed. Banks have to disclose such transactions, even if they are spread across multiple accounts.

High value transactions

Now the question is, what will happen if more than Rs 10 lakh cash comes into your savings account in a financial year? Any amount above this limit will be considered a high value transaction. Banks or financial institutions will have to inform the Income Tax Department about this under Section 114B of the Income Tax Act, 1962. Apart from this, you will have to provide PAN number to deposit more than Rs 50 thousand in a day. If you do not have a PAN, then you will have to submit Form 60/61 as an alternative.

How to respond to income tax notice?

To respond to an income tax notice related to high value transactions, you must have sufficient evidence to support your claim regarding the source of funds. These can be bank statements, investment records and inheritance documents. If you are unsure or concerned about the source of cash, you can consult a tax advisor.

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The post High value transactions: How much cash should you keep in your savings account so that you don’t get an income tax notice? first appeared on Rightsofemployees.com.

The Income Tax Department has made its system foolproof. It is necessary to mention PAN with High -Value Transactions . The bank where you have your savings account, the company that has your insurance plan, the AMC company that you have bought mutual funds from and the bank that has taken a credit card, they all give information about your every transaction to the Income Tax Department. The Income Tax Department matches this data with the information given in your ITR . IT Department Project also keeps a special eye on tax evaders through Insight.

What is Project Insight of Income Tax Department?

Under Project Insight, Income Tax officials also monitor social media accounts of taxpayers on suspicion of tax evasion. For example, if a person buys a car worth more than Rs 10 lakh, he has to pay a luxury charge of 1 per cent. The Income Tax Department can check the income tax return of such a person if there is any doubt. Its purpose will be to find out what are the sources of income of the person.

Income tax officer has many rights

The officer of the Income Tax Department also has the right to seek information from the bank about the income of a taxpayer. He matches these figures with the ITR of the taxpayer. In case of discrepancy, he issues a notice to the taxpayers asking them to clarify the position. That’s why a person thinks that he can hide some information from the Income Tax Department, then it is not possible.

The Income Tax Department uses the following methods to track taxpayers:

1. If you make a deposit of more than Rs 10 lakh in a financial year, make a bank draft or make a fixed deposit in a bank, then the bank sends its information to the Income Tax Department.

2. If you buy or sell a property worth more than Rs 30 lakh, it is necessary for the property registrar to inform the income tax department.

3. If a property worth more than Rs 50 lakh is purchased, then it is necessary to collect 1% TCS on it. It is necessary for the buyer to deposit this money with the Income Tax Department.

4. If you make a cash payment of up to Rs 1 lakh or spend up to Rs 10 lakh in any other financial year, the credit card issuing bank informs the Income Tax Department.

5. If you buy mutual funds, shares or debentures up to Rs 10 lakh in a financial year, then it is necessary for the companies related to the transaction to give this information to the Income Tax Department.

The post High Value Transactions: Know how the Income Tax Department monitors your income and expenses first appeared on Rightsofemployees.com.