5 High-Value Transactions Income Tax Department Can Investigate
The Income Tax Department traces all transactions so that they can curb black money transactions and detect all under-reported incomes. By the final amendment made in 2020, Government of India widened the limits of Specified Financial Transactions, which was previously known as the Annual Information Report. Even though it is not quite possible to miss out on a high-value transaction while filing for ITR, this new provision will further remind the taxpayers that high-value transactions specific to the income tax act should be filed.
List of High-Value Transactions under Income Tax Act
The table below reads out details regarding the high-value transactions and their reporting parties.
| Transaction Type and Limit | Reporting Parties |
| Payment of Rs. 10 lakh or above for bank drafts/pay orders/banker’s cheque in an FYPayment of Rs. 10 lakh or above for pre-paid instruments notified by Reserve Bank of India in a financial yearCash withdrawal or deposit of more than or equal to Rs. 50 lakh from one or more than one current account of a person in one financial year | A banking company or co-operative bank |
| A cash deposit of Rs. 10 lakh or above in one or more than one accounts of an individual (not current account or time deposit) in an FY | A banking company or co-operative bank Post-Master General |
| Deposit of Rs. 10 lakh or more through time deposits(other than renewal of some other time deposit) of a single person in an FY | A banking company or co-operative bank Post-Master GeneralNon-banking financial companyNidhi Company |
| Payments made by an individual-Rs. 1 lakh or above in cash Rs. 10 lakh or more through other modesAgainst bills raised for one or more than one credit cards of that individual in a financial year | Any banking company or financial institution issuing credit card |
| Receipts of purchase of bonds or debentures by a person of Rs. 10 lakh or more issued by a company or institution, excluding renewals in one financial year | Company or institution issuing bonds or debentures |
| Receipts for purchase of shares for Rs. 10 lakh or more by a person issued by the company, counting share application money | Company issuing shares |
| Buy back of shares of Rs. 10 lakh or more from a person in one financial year, excluding open market. | A company listed on a recognised stock exchange buying its own shares under Section 68 of the Companies Act, 2013 |
| Receipts for purchase of units of one or more than one Mutual Fund schemes of amount total of Rs. 10 lakh or more, excluding the amount received on account of transfer of schemes | A trustee of a Mutual Fund or any such person managing affairs of the Mutual Fund |
| Receipt from a person for selling of foreign currency including credit of currency to foreign exchange/ expense in that currency through credit or debit card by traveller’s cheque or draft/ any other instrument amounting up to Rs. 10 lakh or more in a financial year | Authorized personnel under the Foreign Exchange Management Act, 1999 |
| Sale or purchase of immovable property for an amount of Rs. 10 lakh or above by a person or specified by-stamp valuation authority at Rs. 30 lakh or above | Sub-Registrar/ Registrar/ Inspector General appointed under the Registration Act, 1908 |
| Receipt of a cash payment of more than Rs. 2 lakh by a person for purchase of any type of goods and services (excluding those listed on Serial No. 1 to 10 of this regulation, if any) | Any personnel accountable for audit u/s 44AB of the Act |
| Cash deposits between November 9 and December 30, 2016, accounting for up to-Rs. 12,50,000 in one or more than one current account of a person /Rs. 2,50,00 in one or more than one account of a person, other than current account | A banking company or a co-operative bank under the Banking Regulation Act, 1949Post-Master General, as mentioned in Clause (j) of Section 2 of the Indian Post Office Act, 1898 |
| Cash deposits made between April 01 and November 09, 2016, in respect of accounts which should be reported under Serial no. 12 as cash deposited between November 9 and December 30, 2016, accounting up to-Rs. 12,50,000 in one or more than one current account of a person /Rs. 2,50,00 in one or more than one account of a person, other than current account |
Third Parties Reporting of High-Value Transactions
The following list includes the third parties one needs to know about which report high-value transactions-
- Mutual fund companies
- Banks (high-value transactions related to deposits and credit card payments)
- Companies issuing shares, bonds and debentures
- Sub-Registrar office for real estate sales
Report To Trace High-Value Transactions
One can find their high-value transaction details in Form 26AS under a statement of financial transaction called Annual Information Return (AIR). They are listed in Part E of 26AS in detail.
Also Read
Form 26AS – New Format
The Central Government has announced a new format of Form 26AS effective from June 1, 2020. This new format will also include the details regarding your Specified Financial Transactions such as credit card bills, real estate deals, buying and selling of stocks etc.
Mandating Filing ITR
Previously, an individual was required to file Income Tax Return only when the income exceeded Rs. 2,50,000. But, from April 01, 2019, it is necessary for an individual to file for an IT return after exceeding a certain threshold limit.
Newly Added High-Value Transactions Threshold Limits
The following table includes all the newly added high value transactions and their threshold limits:
| Nature of Transaction | Threshold Limit (Rs.) |
| Health insurance premium | 20,000 |
| Life insurance premium | 50,000 |
| Hotel transactions | 20,000 |
| Educational fees or donations | 1,00,000 |
| Annual property tax | 20,000 |
| Electricity bill per annum | 1,00,000 |
| Share transactions in DEMAT accounts | None |
| Purchase of marble, jewellery, white goods etc. | 1,00,000 |
| Deposit in current accounts | 50,00,000 |
| Deposit in accounts (not current) | 25,00,000 |
| Domestic class air travel/ foreign travel | None |
Procedure to Reply for High Value Transactions Notices
If one has come under any of the high value transactions as mentioned above, the Income Tax Department might send a Compliance Notice to you. One can respond to that notice in the process given below:
Step1: Go to the e-filing portal and log in
Step2: Click on the ‘Compliance’ option
Step 3: Under that, click on ‘Accounts with Cash Transactions’
Step 4:One will see the banks with which that individual has made cash transactions
Step 5: Click on ‘Submit’ by choosing any of the options provided below
- Transactions considered as IT return
- Transactions considered as IT returns of the other account holder in case of a joint account
- Transactions not considered in IT return
- Transactions partly considered in IT return
- Tax exempted transactions
Other than the above-given transactions, if you have made a cash deposit between November 9 and December 30 in 2016, you have to check the Compliance Section and choose ‘Cash Transactions 2016’ from the drop-down list.
Tips to Avoid Income Tax Notices on High Value Financial Transactions
It is not an advisable practice to conceal any transaction details while filing for ITR, intentionally or unintentionally. The Income Tax department tracks all the financial transactions and has detailed knowledge about all of them. Usually, transactions worth Rs. 12,000 Crore are considered to be listed under Suspicious Transaction Report for investigation.
Following the given tips might save an individual from getting Income Tax notices on high value transactions from the Income Tax Department.
- File the income tax return before the given due date
- Make sure PAN details are updated
- Check if any transaction is reported under the AIR section in Form 26AS
- Revise the entries of TDS, if possible quarterly
- Make and keep a record of all the high value transactions and expenses
- Mention all the incomes earned by you in the ITR for that financial year
Final Word
It is advisable for all the taxpayers to disclose all the income earned by that individual, including high value transactions in the Income Tax Return. This should be done before the due date to avoid getting any notice from the income tax authorities as well as penalty.
FAQs on filing ITR with high value transactions
The Income Tax department has launched an e-campaign to verify the financial transaction statements as collected by the IT department. Later on, if there are any discrepancies or taxpayers who have not filed their income tax return, they are sent a notice regarding the same.
The following transactions with their threshold limit as mentioned below are added to the list for compulsory IT filing:
Taxpayers whose bank transactions are more than Rs. 30 lakh
Businesses having turnover of Rs. 50 lakh or more
Taxpayers whose rent collections are over Rs. 40,000 per month
The Income Tax Department records all your transactions against your PAN details. To check if all your high value transactions are recorded properly against PAN you can check Form 26AS or Annual Information Statement.
You can view or download Form 26AS through-
Net banking
Income Tax India e-filing portal
For NRIs, Traces Portal as access to 26AS portal is not allowed in some countries due to security reasons
To view Form 26AS through Traces Portal follow the given steps:
Step 1: Login or register in the Traces portal as a taxpayer
Step 2: Click on ‘View Tax Credit’ under ‘View/ Verify Tax Credit’
Step 3: Select your Assessment Year, document format and provide the verification code
Step 4: Click on ‘View/Download/ to view Form 26AS
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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