I-T Jail: The Income Tax Department (ITD) has made specific changes to the Income Tax (IT) laws to encourage more cashless transactions and decrease tax evasion.
I-T Jail” In this respect, financial institutions such as banks, brokerage companies, and mutual fund houses have been instructed to alert the tax authorities anytime a cash transaction exceeds the prescribed amount. Here is a listing of some actions that will likely result in an ITD notification if done in cash.
Fixed Deposits (FD): According to the Central Board of Direct Taxes (CBDT), if a person invests more extra than Rs.10 lakh in term deposit scheme(s) in a fiscal year, the bank must disclose it to the authorities. If the fixed deposit is made through the renewal of another, it is not recorded for reporting.
Credit Card Bills: Cash can be used to pay credit card bills. However, if a bill of Rs.1 lakh or more is paid in cash, the CBDT must be notified. In this regard, yearly credit card bill payments above Rs.10 lakh must be reported to the I-T Department, regardless of the mode of payment.
Real Estate and Property: The tax department has set a cash transaction value of Rs.30 lakh for property transactions. Property registrars must inform the tax department of the acquisition or sale of immovable property if the cash transaction exceeds Rs.30 lakh.
Bank Accounts: The I-T Department has set a cash deposit limit for bank accounts for savings and current accounts. The deposit limit for a savings bank account is Rs.1 lakh. For current bank accounts, the ceiling is Rs.50 lakh. If the cash deposit amount exceeds the statutory limit in any scenario, you will most likely get a notification from the Income Tax Department. Furthermore, the CBDT guidelines for banks and co-operative banks compel financial institutions to disclose yearly cash deposits (savings bank accounts) of Rs.10 lakh or higher.