Income Tax Notice : The rules of the Income Tax Department are quite strict—and rightly so. A major portion of the revenue that runs the country comes through income tax, and the department plays a crucial role in monitoring financial activities. If anyone is found involved in irregularities related to money, the Income Tax Department takes action.
That is why specific rules have been set for financial transactions. There are seven types of transactions that almost certainly invite an Income Tax Notice if carried out. Hence, it is very important to understand income tax rules before making any major transaction.
If you have carried out any such transaction, you should also remain alert. Let’s find out which transactions can trigger an Income Tax notice.
Limit on Property Investment
Buying property is an expensive affair. In today’s time, purchasing property has become difficult as prices are rising continuously. If someone buys a property worth ₹30 lakh or more, this information is automatically shared with the Income Tax Department. In case of large cash transactions, the department can ask you to explain the source of funds.
Foreign Travel Expenses Above ₹2 Lakh Can Be Costly
If a person spends more than ₹2 lakh in a year on foreign travel, this data is reported to the Income Tax Department. The department may send you a notice asking about the source of this expenditure.
Be Careful While Making Credit Card Payments
Income tax rules also apply to credit card usage. If your annual credit card spending exceeds ₹2 lakh, you may come under the Income Tax Department’s scrutiny, and a notice may be issued.
Cash Payment of Credit Card Bills Is Also Monitored
If someone pays a credit card bill of ₹1 lakh or more in cash, the Income Tax Department has the authority to investigate the transaction. If the transaction appears suspicious or linked to black money, an income tax notice may be issued, and penalties can be imposed.
Investment Limit in the Stock Market
If a person invests more than ₹10 lakh in a year in mutual funds, shares, or bonds, the Income Tax Department may issue a notice. In such cases, you may be asked to explain the source of the invested funds.
Be Cautious While Investing in Property
Once again, property investment requires caution. If you invest ₹30 lakh or more in property, the information automatically reaches the Income Tax Department. The department may send you a notice seeking clarification.
Limit on Cash Deposits in Bank Accounts
Depositing a large amount of cash into a bank account can also attract an Income Tax notice. If you deposit more than ₹10 lakh in cash, there is a strong possibility of receiving a notice from the department.
Business Cash Transactions Can Also Invite a Notice
If someone conducts cash-based business transactions, the Income Tax Department keeps a close watch. For business transactions exceeding ₹50,000 in cash, the department may ask for details and issue a notice.