Updated January 10th, 2024 at 17:03 IST

Engaging in cash transactions? Tax authorities may send you notices for these 5 instances

Cash transactions aren't immune; any significant financial activity can draw the Income Tax Department's notice.

Reported by: Business Desk
Notices lurk here | Image:Freepik

Notices lurk here: Are you engaging in cash transactions? Beware, as you could still receive notices from the Income Tax Department. Contrary to the notion that cash dealings might go unnoticed, any substantial financial activity could attract attention. These 5 transactions might trigger Income Tax Department notices.

Cash deposits in bank accounts

When an individual deposits Rs 10 lakh or more in cash within a financial year, it becomes mandatory for the Central Board of Direct Taxes (CBDT) to report the transaction to the Income Tax Department. In such cases, the depositor might face inquiries regarding the source of the funds, particularly if the amount exceeds the prescribed limit.

Cash deposits in Fixed Deposits (FDs)

Similar to bank account deposits, cash deposits exceeding Rs 10 lakh in FDs within a financial year may trigger enquiries from the Income Tax Department.

Investments in shares, mutual funds, debentures, or bonds

When engaging in significant cash transactions of Rs 10 lakh or more involving shares, mutual funds, debentures, or bonds, the Income Tax Department flags and reports these activities. Subsequently, investors may be subject to enquiries, where they are required to furnish details about the source of funds utilised for these transactions.

Credit card bill payments

Credit card bills surpassing Rs 1 lakh in a month, when settled in cash, can trigger enquiries from the Income Tax Department regarding the source of funds. Moreover, any payment amounting to Rs 10 lakh or more, conducted either online or offline, over the course of a financial year, may prompt further enquiries into the origin of the funds by the Income Tax Department.

Property-related transactions

Cash transactions exceeding Rs 30 lakh in property purchases can draw the scrutiny of the Income Tax Department. The details of such transactions are communicated to the department by property registrars. This, in turn, initiates potential enquiries into the source of funds used for the substantial property acquisition.

According to tax experts, these transactions, involving substantial amounts of cash, can lead to the Income Tax Department seeking explanations regarding the origin of the funds, emphasising that both online and offline transactions are subject to scrutiny.


Published January 10th, 2024 at 17:03 IST