Income-Tax department keeps a tab on high value cash-related transactions such as banks, mutual fund houses, brokerages and registrar of properties. Such big-ticket transactions, beyond a certain limit, are reported to IT department.
The financial information of individuals who deal in large transactions but do not show the same on their income tax returns is procured from various government departments under various pacts with IT department.
Following transactions can get you on the radar of tax authorities and even attract tax notices:
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Money Deposit in Fixed Deposit (FD):
In addition to the temporary deposit made by renewal of another time deposit, banks must report a fixed deposit of Rs 10 lakh or more per financial year to one or more personal accounts according to the Central Board of Direct Taxes (CBDT). This includes depositing and withdrawing postal accounts
Credit card payments:
According to CBDT, it is authorized to report payments involving Rs 1 lakh or more on credit card payments. Also, if a payment of Rs 10 lakh or more is made to settle credit card payments during the financial year it will be appropriate and the same reported.
Immovable property:
The registrar of properties will have to report the purchase and sale of all immovable property with a stamp of Rs 30 lakh or more to the IT department.
Purchase of securities such as stocks, bonds, loans:
Companies issuing bonds, loans or shares are required to report an investment of Rs 10 lakh or more to the investor during the financial year. Similarly, the purchase of joint ventures and shares of the same limit are also required to be reported.
Foreign Exchange:
Purchase foreign checks or guest checks with forex, debit or credit cards in excess of Rs 10 lakh must be reported to the revenue department.
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