Have You Got Notice From Income Tax Department? Avoid Receiving It.

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Have You Got Notice From Income Tax Department? Avoid Receiving It.

One can conceal their income, but they cannot conceal their expenses or investments because the fundamental goal of the Income Tax Department is to catch tax evasion. The start of tax season coincides with the beginning of the new fiscal year, 2023–24, which has been going on for more than a month. While taxpayers are busy submitting their reports, the Income Tax Department is reviewing prior years’ returns and alerting people who are suspected of tax evasion. In order to avoid receiving one of these notices, it is essential to understand why people are receiving them. Statement of Financial Transaction (SFT) is a system that the department has put in place to keep track of taxpayers’ investments and spending.  The PAN, mobile number, and Aadhaar, which are used in nearly every significant transaction, are additional ways that the department receives information about financial transactions. For various types of transactions, various limits have been established, and if a transaction exceeds the limit, the concerned unit notifies the Income Tax Department.

PAN is required when buying or selling any property when opening a bank account or Demat account when applying for a credit card, or when paying more than ₹ 50,000 for bonds, mutual funds, insurance, or other purchases. TDS (Tax Deducted at Source) is another tool for keeping tabs on taxpayers’ earnings. When interest on bank or post office deposits exceeds ₹ 40,000 per year, as well as in certain other circumstances, such as when buying real estate, TDS is deducted.

For various types of transactions, various limits have been established, and if a transaction exceeds the limit, the concerned unit notifies the Income Tax Department. To avoid receiving a letter from the Income Tax Department, taxpayers must deduct their expenses and investments from their income. If income and expenses diverge, the department may publish a notice. By downloading their Annual Information Statement (AIS) from the Income Tax Department website, taxpayers can review the specifics of all investments and expenditures made.

The following cases are reported to the income tax department:

  1. The department is informed if a person pays a credit card bill for ₹ 1 lakh or more in cash or a bill for ₹ 10 lakh or more using any method.
  2. Any cash payments made by the buyer for purchases of goods or services totaling more than ₹ 2 lakh must be reported by the seller to the Income Tax Department. Any transaction exceeding ₹ 2 lakh also requires a PAN card.
  3. Every time someone buys or sells a piece of property for ₹ 30 lakh or more, the property registrar notifies the department. TDS has deducted 1% on real estate purchases over ₹ 50 lakh, and the department is notified of the transaction.
  4. The Income Tax Department is informed if a person deposits or withdraws cash from a current account totaling ₹ 50 lakh or more.
  5. Both cash and digital FDs of ₹ 10 lakh or more in a fiscal year must provide the department with information.
  6. The bank must notify the department of any deposits or withdrawals in cash savings accounts of at least  ₹ 10 lakh in any given fiscal year. When cash is used to make a demand draft (DD), pay order, or banker’s check worth ₹ 10 lakh or more, information is also given.
  7. Anytime a person buys securities worth Rs 10 lakh or more in a fiscal year, the company or organization in charge of the sale is required to inform the Income Tax Department.

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