The Cash Transaction Rule is exciting! Five cash transactions will result in an income tax notification; new regulations are in effect

 The Cash Transaction Rule is exciting! Five cash transactions will result in an income tax notification; new regulations are in effect

Cash Transaction Rule: These days, the Income Tax Department is very wary about cash transactions.

The Income Tax Department and other investment platforms, such as banks, mutual fund companies, broker platforms, etc., have tightened the restrictions around cash transactions for the general public in recent years. Tell us all there is to know about it.

These days, cash transactions are only permitted by these lending and financial organizations up to a particular amount. If there is even the smallest infraction, the Income Tax Department may issue a notification.

These kinds of transactions are numerous and are under income tax surveillance. Banks, mutual funds, brokerage firms, and property registrars must notify the Income Tax Department if you do significant cash transactions with them. Tell us about five of these transactions that might get you into trouble.

Fixed Deposits at Banks (FD)

A bank FD cash deposit cannot be more than Rs 10 lakh. The disclosure requirement for banks about individual deposits in one or more fixed deposits above the stipulated limit was announced by the Central Board of Direct Taxes (CBDT).

Deposit in a bank savings account

A bank account's maximum cash deposit amount is ₹10 lakh. An income tax notification may be sent by the Income Tax Department to a savings account customer if the account holder deposits upwards of ₹10 lakh in a fiscal year. In in the meantime, bank account cash deposits and withdrawals over ₹10 lakh in a fiscal year have to be reported to the tax authorities. The maximum for current accounts is ₹50 lakh.

Paying credit card bills

Payments made in cash for credit card bills totaling Rs 1 lakh or more are subject to CBDT regulations and must be reported to the Income Tax Department. Furthermore, the tax department should be notified if ₹10 lakh or more is paid in a fiscal year to pay off credit card debt.

Buying or selling real estate

Any investment or sale of immovable property for ₹30 lakh or more must be reported to the tax authorities by the property registrar. Because the Registrar of Property will undoubtedly report on cash transactions, taxpayers are encouraged to disclose any cash transactions in the acquisition or sale of any real estate property on Form 26AS.

Investing in bonds, debentures, mutual funds, and shares

It is important for investors to make sure that their cash transaction in stocks, bonds, mutual funds, or debentures that don't exceed ₹10 lakh throughout a financial year.

To track down taxpayers' high-value cash transactions, the Income Tax Department has created the Annual Information Return (AIR) statement of financial activities. Based on this, the tax authorities would gather information on transactions with unusually high values within a certain fiscal year.