When engaging in any high-value cash transaction, one must maintain vigilance since the Income Tax Department has grown more attentive about cash transactions. If a person invests in the stock market using a demand draught and pays the broker cash, the broker will record the transaction in their balance sheet. The different monetary transactions that might result in an income tax notification were discussed. When engaging in any high-value cash transaction, one must maintain vigilance. It’s because the Income Tax Department has grown more attentive over cash transactions. Today, it has a variety of methods with which it can determine whether or not someone has engaged in a high-value cash transaction.
Consider the following scenario: If a person invests in the stock market using a demand draught and pays with cash, the broker will record the transaction in their balance sheet. As a result, it is necessary to understand the high-value cash transaction limit. And to keep one’s cash transactions under that level to avoid receiving any taxation notice.”
Accounts receivable and payable
The maximum amount of cash that may be deposited in a savings account for an individual is Rs. 1 lakh. A savings account customer who deposits more than Rs. 1 lakh in their savings account may be subject to an income tax notification from the Income Tax Department of India. Similarly, current account holders are subject to a maximum of Rs. 50 lakh and those who exceed this limit may be subject to an income tax notice. The money transfer limit in savings account for an individual is Rs. 1 lakh. The income tax department may issue an income tax notice to a savings account user who deposits more than Rs. 1 lakh in their savings account. Similarly, the maximum for current account holders is $50,000, and any breach of this restriction may result in an income tax notification.
Payment of a credit card bill
It is important not to go above the Rs. 1 lakh limit when paying a credit card bill. The Income Tax Department does not take kindly to violate this cash limit while making credit card bill payments.
FD from a bank (fixed deposit)
Cash deposits in bank FDs are permitted; however, the total amount should not exceed Rs. 10 lakh. The violation of this Rs. 10 lakh restriction is likewise not recommended for bank depositors who make cash deposits into their bank’s fixed deposit accounts.
Debenture issued by a mutual fund
People who engage in mutual funds, equities, bonds, or debentures must ensure that the amount of cash they put into the investment mentioned above does not exceed the Rs. 10 lakh limit set by the government. Failure to comply with this cash infusion limit may result in the income tax department conducting a review of your most recent Income Tax Return (ITR).
In the field of real estate
In the course of purchasing or selling a property, one must ensure that any cash transaction beyond Rs. 30 lakh is suspicious since the Income Tax Department prohibits cash transactions exceeding this threshold in a real estate transaction.
The government introduces new rules in the Income Tax Act to restrict the amount of cash that people and corporations may possess. Moreover, these restrictions are created so that the tax department can match a person’s earnings with their assets and expenditures. It helps to reduce fraud. A breach of these restrictions may result in the relevant financial institution or business organization reporting the transaction to the government and issuing an income tax notice to the person who violated the limits set out above.
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