Are you filing your ITRs timely? Paying all your taxes? Have all your bills and receipts in place? Still wondering why has the Income Tax Department targeted you?
The Income Tax Department has been doing a 360 degree audit of its tax payers.
I am sure all of us have come across stories of leading business tycoons Bollywood stars, political leaders where their houses and workplaces were being raided by the Income Tax Department. We’ve also heard numerous controversies that came out of it.
But what happens when the same happens to a common man?
So, can you come under the radar of Income Tax Department even when you have not done anything legally wrong?
You’ll be surprised to know that you can come under the Income Tax Department’s radar when you make the following transactions. Let’s have a look at all possible scenarios.
Statement of Financial Transactions
Statement of financial transactions is a report of specified financial transactions by specified persons.
If you fall under the category of specified persons then you are under a mandate to submit SFT to the Income Tax Authority. You can also submit it to such other specified authority or agency. If you register, maintain or record such specified financial transactions, then you come under the specified person’s category.
You also need to file an Annual Information Report to report such transactions.
High Value Transactions
The government has identified new high-value transactions, such as:
- Domestic business-class air travel/foreign travel
- Payment of educational fee/donations
- Purchase of jewellery
- Purchase of white goods
- Purchase of paintings
- Purchase of marble
- Electricity consumption above INR 1,00,000
A proposal was passed to include them in the reporting of SFTs.
Insurance Premium Payments
The following premium payments can come under the radar of Income Tax Department:
- Life insurance premium payments over INR 50,000
- Health insurance premium payments over INR 20,000. As the Income Tax Department plans to expand it’s scope of reportable financial transactions under the SFTS, it may scan the payment on these premiums
Did you know that Income Tax Department has always been your travel buddy? The Income Tax Department may scan any of your hotel transactions above INR 20,000.
Financial Security Investments
If a company has a receipt of INR 10,00,000 or above from an investor, it is liable to report it to the Income Tax Department.
The investment made by the person should be on the form of acquiring:
Credit Card Bill Payments
You are likely to come under the radar of Income Tax Department if:
- You make credit cards bill payments of more than INR 1,00,000 p.a. in cash
- You make credit cards bill payments of INR 10,00,000 p.a. through NEFT
Transactions in Your Account
Current Accounts Deposits
The following payments pertaining to the current accounts of any person needs to be reported to the Income Tax authorities by the bank:
- Cash deposits or withdrawals exceeding INR 50,00,000 in a financial year
- Purchases of bank drafts or pre-paid instruments issues by RBI, exceeding INR 10,00,000 in a financial year
Cash deposits made amounting INR 10,00,000 or above in a person’s account need to be reported by the banks.
Sales and purchase of immovable property above INR 30,00,000 must be reported to the Income Tax authorities through the Registrar of Properties.
If you are an authorised individual, as Foreign Exchange Management Act, you must register any receipts for the selling of foreign currency. These receipts must be totaling INR 10,00,000 or more in a financial year.
Now, chances are your transactions might fall under at least one of the mentioned cases. However, you need not worry about any of this if you have already reported your information to CBDT. Nonetheless, there is nothing to be concerned about if all your transactions are reported and you have all your receipts ready.
Got questions around any of these? Shoot ’em on TaxQ&A and we’ll take care of the rest.