Cash transactions are now under strict scrutiny by the Income Tax Department.
Cash transactions are now under strict scrutiny by the Income Tax Department. In recent times, the department along with various investment platforms like banks, mutual fund houses, and brokerage platforms, has imposed stricter regulations on cash transactions for the general public. These institutions now have set limits on cash transactions, and anyone exceeding these limits may receive a notice from the department.
The heightened vigilance against cash transactions by the department is part of a broader effort to combat black money and tax evasion. Cash transactions have often been misused to hide illegal income, and by imposing limitations on them, the Department aims to deter tax evasion.
The new regulations on cash transactions have several implications for the general public. Although this may cause some inconvenience, it is essential to recognise that these measures are in place to safeguard the public from financial crimes. If there is a minor violation, the Income Tax Department might issue a notice to the offender.
Engaging in substantial cash transactions could result in an individual receiving a notice from the Income Tax Department. Various cash-related transactions, such as those conducted through banks, mutual fund houses, brokerages, and property registrars, fall under scrutiny. It is mandatory to report high-value transactions to the department if they exceed a certain threshold.
Through agreements with various government agencies, the department has established a robust system for sharing financial information. This collaborative approach empowers the department to track down individuals who participate in substantial cash transactions without disclosing them in their tax filings. These agreements serve as a potent tool for combating tax evasion.
With access to a diverse array of financial data, including bank account records, credit card statements, and investment transactions, the department can effectively identify individuals who may be evading taxes. These comprehensive data sources enhance the Department’s ability to enforce tax compliance.
To track high-value cash transactions, the authorities have introduced an Annual Information Return (AIR) statement. This statement encompasses all financial transactions an individual undertakes in a financial year, including investments in mutual funds, stocks, bonds, and debentures.
In cases where an investor makes a cash investment in these assets surpassing ₹10 lakh, the transaction details will be reported to the tax department. Subsequently, tax officials will scrutinise the transaction to ensure compliance with the law.
Being well-informed about the cash transaction limits and accurately reporting all financial transactions is crucial for investors. By doing so, they can contribute to the prevention of money laundering and tax evasion, thus avoiding potential investigations by authorities.
It is crucial to understand that if investigated by the tax department, investors may face penalties or even criminal prosecution.
The AIR statement serves as a potent tool for the tax department to identify individuals evading taxes, making adherence to the law essential to maintain financial integrity and compliance.
The due date for filing the ITR is getting closer with each passing day. As per a statement issued recently by the Ministry of Finance, over 70 percent of taxpayers have zero tax liability while more than two crore people have already filed their ITRs to date.
