Five types of cash transactions that may land you in trouble.

The Income Tax department keeps an eye on various types of transactions done using cash. Thus, making a high-value transaction in cash can lead to you in problems.

In this article, we will discuss five such types of cash transactions that can cause problems, when you file your Income Tax Returns (ITR).

The Income Tax department has become very aware against cash transactions. Various financial entities, like Mutual Fund houses, Banks, etc., along with the Income Tax department, have tightened the rules on cash transactions. They allow people to transact in cash up to a certain limit. The Income Tax department will be notified, if an individual makes a cash transaction above the specified limit.

In case an individual makes a high-value cash transaction, he might receive a notice from the Income Tax department. Therefore, it is recommended to be mindful of high-value transactions, while filing ITR.

Cash transactions that are under the radar of the IT Dept.:

Payment of a Credit Card Bill

Payment of Rs 1 lakh or more in cash and Rs 10 lakh or more, by any mode, towards your Credit Card bills will be reported, as per the Central Board of Direct Taxes (CBDT) norms.

Bank Fixed Deposit (FD)

The specified limit for cash deposits in an FD is Rs 10 lakh. The CBDT has announced that in case a person makes cash deposits exceeding Rs 10 lakh in an FD, the Bank needs to report it.

Cash Deposits in Bank Accounts

The cash deposit limit, in the case of Savings Accounts, is Rs 10 lakh. If a person deposits more than Rs 10 lakh in a financial year, then the Bank will report it. However, for Current Accounts, the limit is Rs 50 lakh.

Real Estate Transactions

If a person purchases or sells any real estate property that is valued at Rs 30 lakh or more, then the property registrar will report the sale or purchase transaction of the property.

Investments in Shares, Bonds, Mutual Funds, and Debentures

In case a taxpayer makes cash transactions of more than Rs 10 lakh in a financial year in Shares, Bonds, Mutual Funds, or Debentures, then it will be reported to the Income Tax authorities.

Don’t violate cash transaction rules.

Violating any cash transaction rule can cause trouble for you. Therefore, it is important to understand these rules and avoid such high-value cash transactions.