Do you want to be sure before doing High-value transactions? Read this guide to gather all information regarding how and what type of income tax notice your business might get from doing high-value transactions.
Income Tax Notice for a High-Value Transaction: If an individual engages in high-value cash transactions, there’s an excellent chance that they will receive an alert from the Income Tax Department. The high-value transaction should always report to the Income Tax Department if the amount exceeds a specific threshold.
This IT Department has settlements with several government agencies to get financial records of people who engage in high-value transactions. However, they do not declare them when filing their tax returns.
What Are High-Value Transaction Notifications?
The taxpayer must report transactions on the income tax return in case the transactions are made in higher amounts or exceed a threshold.
If your business operated by a single individual then you should file ITR for Sole Proprietorship
The department collaborates with various government agencies to gather the financial information of taxpayers who engage in high-value transactions but are not reported when filing the ITR.
Here are a few examples of transactions that could be subject to an IT department’s notice when they do not report the how to check income tax notice online.
1. Fixed Deposits at Banks
In writing, deposits of cash in a bank’s FD accounts exceeding ₹10 lakhs must be reported to the IT department. Banks must report the transactions in case the total amount of deposits in fixed deposits is greater than the stated limits. Banks do it by filling out form 61A, an account of the financial transaction.
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2. Selling Foreign Currency and Paying for Foreign Exchange
A sum of ₹10 lakhs or greater in the financial year of any person for the purchase of foreign currency with any credit or debit in that currency, whether through:
- The use of a debit or credit card
- Insurance on a traveller’s cheque draft
Or other instruments that are not notified in writing to the Income Tax Department.
3. Payments for Credit Card Bills
The payment of a sum of ₹1lakh or more than that in cash to settle credit card charges will need to be reported, according to CBDT. In addition, if someone spends more than at least ₹10 lakhs to pay credit card debts in a fiscal year, these transactions are also required to report to tax authorities.
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4. Sale and Purchase of Immovable Property
The Registrar for properties must report the sales and purchases of every immovable property that exceeds ₹30 lakhs in value to Income Tax Authorities.
5. Property Transactions
The property registrar must submit to tax authorities a report of the “purchase or sale by any person of immovable property for an amount of Rs ₹30 lakhs or more.
6. Mutual Funds, Shares, Bonds, Debentures and Shares
The maximum cash transaction amount for mutual funds, bonds, stocks, or debentures must not exceed ₹10 lakhs rupees during a fiscal year. Your Annual Information Return (AIR) statement provides details about financial transactions. The tax authorities follow the significant transactions using this. The Part E section of Form 26AS includes all the information about high-value transactions.
7. Depositing Money Into Savings Bank Accounts
The maximum amount of cash deposits for an account at a bank is ₹10 lakhs. If a savings account holder makes more than ₹10 lakhs in a single financial year, the Income Tax Department may serve an income tax notice.
Thus, cash deposits and withdrawals from a bank account exceeding the ₹10 lakhs limit within a financial year must be reported to tax authorities. For account balances, the limit is ₹50 lakhs.
8. TDS Amount Error
The main problem with returns usually involves a mismatch of your TDS amounts. Sometimes your deductor or employer might have waited too long or committed a mistake in filing the TDS returns. In this case, ask your employer to amend the credit amount you got to the TDS amount.
9. Deposits Into Current Accounts
Cash deposits or withdrawals that total up to the amount of ₹50 lakhs or greater during the course of a fiscal year on at least one Current Account of an individual will need to be reported to I-T by the banks.
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10. Discord in Returns You File
If you find that the difference is in the amount that you stated on the returns you completed, try to figure out the distinction. There could be a reason behind the discrepancy.
- You might have provided incorrect details
- You might have claimed a deduction in the incorrect section
- You might have neglected to declare certain incomes, such as interest from FDs
What Is the Process for Parties Who Reported High-Value Financial Transactions?
- Sub-Registrar locations for real estate transactions
- Mutual Fund Organisations
- Banks: They track high-value credit card transactions and deposits.
- Companies that issue shares
- Companies that issue bonds, or debentures
How Do I Reply to Income Tax Notice Online?
The letters that the departmental IT Department sends out to you can be viewed in your account on the e-filing site of the department. If you have not finished the registration on the online tax portal, you can register by registering on a new social media account.
- Log into the portal and look for the tab called ‘Compliance’ where you can view the information of non-filers.
- You can read the notice and submit a response in the ‘View and Submit Compliance’ section.
- Under the ‘View and Submit Compliance’ tab, you’ll find the ‘Filing of the Income Tax returns’ selection. Through it, you can submit the ITR 4 Filing Charges. You can choose either whether ITR has been filed or ‘ITR was not filed. If you choose that you file the ITR, you must enter the filing mode along with the date of filing. Also, you must include the acknowledgment numbers (which are available in the ITR 6 Filing Process.
If you don’t fill out the ITR, you may use one of the following reasons:
- There is no tax-deductible income
- The business is no longer active
- Return under preparation
- Other
Under Other, you will need to state the specific reason in the section ‘Remarks.
Conclusion
Large-scale transactions like those mentioned above could cause issues with the Income Tax Notice department. So mutual funds houses, banks, brokerages, and the real estate Registrar will need to notify the income tax department.
We suggest all taxpayers declare all earnings earned by the individual, including transactions with a high value on the income tax return. You must complete it before the deadline to avoid receiving any notice or penalties from income tax authorities.
In case of non-compliance or disclosure, the Income Tax Notice will initiate penal actions. They will issue notices to take further action against the taxpayer who has defaulted.
