Income Tax Scrutiny:

Many people use their savings accounts for daily transactions like deposits, withdrawals, bill payments, and money transfers. However, not everyone knows that exceeding certain limits can lead to scrutiny from the Income Tax Department. Tax experts have listed ten such transactions that may invite an IT notice if not handled carefully.

Income Tax Scrutiny

1. Large Cash Deposits:

If you deposit more than ₹10 lakh in cash in a financial year into your savings account, the bank reports it to the Income Tax Department. You’ll need to show documents proving the source of funds.

2. Credit Card Bill Payments:

If you pay credit card bills exceeding ₹1 lakh in cash or ₹10 lakh via online or cheque in a year, the IT department may question your spending pattern compared to your declared income.

3. Frequent Large Withdrawals:

Regularly withdrawing large sums that don’t match your income profile may raise suspicion. Always keep a record of such transactions.

4. Buying or Selling Property:

Any property transaction above ₹30 lakh is automatically reported to the IT department through the registrar’s office. Mismatched data in ITRs can lead to notices.

5. Reactivating an Inactive Account:

If a long-inactive account suddenly receives or withdraws large amounts, banks treat it as suspicious and inform the IT authorities.

6. Foreign Currency Transactions:

Spending or transferring more than ₹10 lakh abroad through forex cards or international credit cards must be reported in ITRs. Missing this can cause trouble.

7. Interest Income Discrepancies:

If the interest income declared in your ITR doesn’t match the bank’s records (Form 26AS or AIS), you may get a notice.

8. Dividends and Capital Gains:

All dividend or capital gain income is shared by banks and mutual funds with IT authorities. Ensure all details are reported accurately.

9. Multiple Savings Accounts:

If you hold several accounts, include the total interest earned from all of them in your ITR to avoid discrepancies.

10. High Credit/Debit Card Transactions:

Large or frequent transactions using your or others’ cards during sale seasons can exceed permissible limits and attract scrutiny.

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