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Home BusinessITR Filing 2023: How To Stay On The Right Side Of The Law With Your High-Value Cash Transactions
The income tax department has imposed stricter regulations on cash transactions, and anyone exceeding the limits set by the department may receive a notice. Check the nature and value of high maximum value transactions here.
New Delhi: The clock is ticking on the last date for filing your income tax return (ITR), and if you haven’t filed the ITR yet, you have less than 48 hours left.
Due to the high number of cash transactions, the Income Tax Department is cracking down on cash transactions. If you’re thinking of making a large cash payment, you might want to think again. The income tax department has imposed stricter regulations on cash transactions, and anyone exceeding the limits set by the department may receive a notice.
Why is the Income Tax Department Cracking Down on High Cash Transactions?
There are a few reasons. First, cash transactions are more difficult to track than electronic transactions. This makes them more attractive to criminals who want to launder money or evade taxes. Second, cash transactions can be used to finance illegal activities, such as terrorism or drug trafficking.
You could receive an unlawful notice from income tax authorities as a result of cash transactions like these:
Fixed Deposits at the Bank
The Central Board of Direct Taxes (CBDT) has capped the amount of cash deposits into bank fixed deposits at Rs 10 lakh. Banks are now required, as of this notification, to disclose whether any specific deposits in one or more fixed deposits exceed the specified maximum.
Savings Account Deposits with Banks
Cash deposits into bank accounts are subject to strict controls in India. The maximum cash deposit allowed for savings accounts each year is 10 lakh rupees. Therefore, a user of a savings account is not allowed to deposit more than Rs 10 lakh in cash in a single fiscal year.
Credit Card Payments
The Central Board of Direct Taxes (CBDT) has established stringent rules on cash payments for credit card bills. Any cash payment for credit card debt of one lakh rupees or more must be reported right away to the tax authorities. Additionally, individuals who pay their credit card debt in cash for at least Rs 10 lakh throughout a fiscal year are required to declare these transactions to the tax department.
Real Estate-Related Business Dealings
Property registrars are required to inform the tax authorities of all immovable property transactions or sales in India that amount to Rs 30 lakh or more. This means that regardless of how you pay for the property—cash or another method—if the transaction exceeds Rs 30 lakh, the property registrar will issue a report to the tax authorities.
Investments In Stocks, Bonds, Debentures, and Mutual Funds
Investors should be aware of the cash transaction restrictions while investing in mutual funds, equities, bonds, or debentures. In these assets, a financial year’s maximum cash investment is 10 lakh rupees. If you go over this cap, the tax department may look into it.