How high value transactions are tracked by Income tax department

Most of us file our return with half knowledge or even if we use services of a professional we don’t want to give them all of the information. With more consolidation with various departments of government it is not easy to hide what you are doing and Income tax department have various sources to find out what you are doing. It is important to be aware to avoid the notice from department as it will result in wastage of time and may result in interest and heavy penalties. Let us understand what information department seek. Following are the basic high value transaction you should disclose in your income tax return to avoid useless litigation.

• If cash aggregating to Rs 10 Lakh p.a. is deposited in your Bank Savings Account.
• If you make Credit Card payments of more than Rs 2 Lakh p.a.
• If you buy mutual fund units worth more than Rs 2 Lakh.
• If you invest more than Rs 5 Lakh in Debentures or Bonds issued by any company.
• If you buy shares worth more than Rs 1 Lakh.
• If you invest more than Rs 1 Lakh in Gold ETFs.
• If you buy or sell an immovable property worth more than Rs 30 Lakh.
• If you invest Rs 5 Lakh or more in RBI bonds in a year.

In recent press release on 23rd March 2016 Central Board of Direct Taxes has directed all assesses to give correct information of interest income earned.Information will also be provided by Banks to department regarding interest income.

Following is the text of press release:

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

PRESS RELEASE

New Delhi, 23rdMarch, 2016

Sub: Inclusion of interest income in the return of income filed by persons liable to pay tax- regarding-Information regarding interest earned by individuals and business entities on term deposit is filed with the Income Tax Department by banks including co-operative banks and other financial institutions and state treasuries, etc.

Form 26AS reflects only those payments on which tax has been deducted and it can be viewed by the individual tax payer by logging in to www.incometaxindiaefiling.gov.in.

The information about interest payments without deduction of tax is also filed by the payer with the Department.

Central Board of Direct Taxes would like to inform the persons earning interest income that interest credited/received on deposits is taxable unless exempt under section 10 of the Income-tax Act. Such interest income should be shown in thereturn of income even in cases where Form 15G/15H has been filed if the earning is not exempt under section 10 of the Income-tax Act and the total income of the person exceeds the maximum amount not chargeable to tax.

Tax payers are advised to collect correct details of interest received or credited and

*.file their return of income for assessment year 2014-15(if not filed already) on or before 31.03.2016 in case their total income exceeds the maximum amount not chargeable totax.

*.revise their return of income for assessment year 2014-15/2015-16 if the return already filed does not include taxable interest income.

*.file return of income for assessment year 2015-16, if not filed so far by including taxable interest income if any,on or before 31.03.2016 and avoid penalty u/s 271F.

Recently government decided to seek information regarding high value transactions from all goods and services providers in a prescribed format.(Form 61A).Format Attached.Also assessee need to quote their PAN in all financial transactions.

form61a

• Immovable Property : The Registrar of properties will have to report purchase & sale of all immovable property exceeding Rs 30 Lakh to the Income Tax authorities.
• Professionals : The Professionals will be required to inform the tax department of receipt of cash payment exceeding Rs 2 lakh for sale of any goods or services.
• Cash Deposits in Banks : Banks will have to report cash deposits aggregating Rs 10 lakh or more in a financial year in one or more accounts of a person.
• Term Deposits in Banks :  Banks will have to report cash deposits aggregating Rs 10 lakh or more in a financial year in one or more Time Deposit accounts of a person. These norms will also cover deposits and withdrawal made in Post Office Account.
• Deposits in Current Accounts : Cash deposits or withdrawals aggregating to Rs 50 lakh or more in a financial year in one or more Current Account of a person will have to be reported by the bank to the I-T authorities.
• Any cash payment of Rs 10 lakh or more in a financial year for purchase of bank drafts or pre-paid instrument issued by RBI will also be reported.
• Investments in Financial Securities : A company has to report receipt of Rs 10 lakh or more from a person/an investor in a financial year for acquiring bonds, debentures, shares or mutual funds.

Department also seek information from third parties like Banks, Mutual fund companies etc.

BEfore filing your return this time make sure that you have revealed all the necessary information to the department regarding your financial transactions. Also in new ITR format you need to reveal all bank accounts( including dormant accounts) and information regarding assets in foreign countries. Take care to reveal all those information in your ITR correctly because that will also be cross verified by the department from third parties.  FIle your return on time and provide the true and correct information.