Warnings from the Income Tax Department create stress even if you properly filed your income tax returns within the specified deadline. The Income Tax Department tracks high-value and suspicious transactions, but other activities do not automatically draw their attention. The following guide provides readers with an explanation of six financial transactions that might trigger a tax notice, together with appropriate prevention methods.
1. Large Cash Deposits in Savings Accounts
Depositing over Rs 10 lakh in your savings account within a financial year may draw the attention of the Income Tax Department, which monitors such transactions to detect any unreported income.
2. High-Value Property Purchases
Similarly, if you buy property valued at Rs 30 lakh or more, it must be accurately reported in your Income Tax Return. Failing to do so, especially when your declared income doesn’t match the purchase, could trigger a notice.
3. Big Investments in Fixed Deposits
Fixed Deposits (FDs) are considered safe investments, but putting more than Rs 10 lakh in FDs annually can also raise red flags if not properly declared. Always ensure these are reflected in your returns.
4. Large Cash Payments for Credit Cards
Making regular credit card payments exceeding Rs 1 lakh in cash might lead to questions about the cash source. Though not illegal, frequent large cash transactions can lead to scrutiny, so it’s better to opt for digital payments for added transparency.
5. Buying Foreign Currency in Bulk
Additionally, buying foreign currency or travel cards worth Rs 10 lakh or more can attract attention from tax authorities.
6. Investing Heavily in Mutual Funds or Bonds
Likewise, investing over Rs 10 lakh in mutual funds, bonds, or debentures in a single year should be correctly reported in your ITR to avoid confusion.
Stay Transparent And Maintain Proper Records
To stay on the safe side, maintain proper documentation such as bank records, investment proofs, and evidence of income. When in doubt, seek advice from a trusted Chartered Accountant or tax expert. Staying honest and compliant with tax regulations helps avoid complications in the long run.
Also Read: How Much Income Tax Did Driver Of Mukesh Ambani Pay In A Year? The Figure Will Shock You
