Income Tax: The Income Tax Department keeps a close eye on income. Income Tax keeps an eye on all types of high transactions. If we make any mistake in ITR, then we can get a notice from Income Tax. What should we do and what should we not do to avoid all this?
Income Tax: If you also make a lot of transactions then you need to be careful. This is because the Income Tax Department keeps a close watch on such transactions. If any difference is found between your income and the lifestyle shown by the transactions, then you may get a notice from the Income Tax Department. So be careful before making any transaction.
Banks are the main source of information about financial transactions. Through banks, the Income Tax Department keeps a close eye on your income and expenses. It is necessary for all banks to give information about some important and special transactions to the Income Tax Department. For example, if you deposit more than Rs 10 lakh in your savings account, the bank gives its information to the Income Tax. Similarly, if you make an FD or RD of more than Rs 10 lakh by paying cash, the bank gives its information to the Income Tax Department.
This is how the track goes
The income tax department pays special attention to those transactions which do not appear to be in accordance with the income of a person. These transactions are regularly recorded by financial institutions under the Statement of Financial Transactions (SFT). This helps the Income Tax Department to detect irregularities. The Income Tax department keeps an eye on all these things like depositing more than Rs 50 lakh in a current account, making payment of Rs 10 lakh in a year through credit card, investing more than Rs 10 lakh in a financial year in mutual funds, debentures, shares etc.
What to do after receiving the notice?
Taxpayers should take some important steps to avoid the notice. Experts say that keep all records complete and accurate. Keep filing returns on time. Disclose all sources of income, including exempted income, and keep documents like bank statements, invoices, and proof of sources of funds. If you have received a notice, read it carefully. Then give a transparent answer. If there is any problem, you can also seek advice from the CAV.
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