Before depositing or withdrawing any amount from the bank account, we have to ensure that while complying with the applicable provisions, we are not liable to incur such transaction which may bring you to tax under Rule 114E. Let us know about it in detail.
To meet their banking needs, people working in any sector, including salaried people, must have at least one savings account, although many people keep more than one account for various reasons. Stable income is where people usually open a savings bank account because here they also get some interest on the balance amount. Although there is generally no limit on the amount of money that can be deposited in a savings account, have you ever wondered how much money you can put in or withdraw from a savings account in a financial year so that you come under the tax net? Shouldn’t I come?
Tax experts say that to curb black money, the government has made it mandatory for banks, corporates, post offices and NBFCs to submit financial reporting (SFT) statements when the transactions in the savings account exceed the prescribed amount. This includes depositing or withdrawing cash, investing in shares, mutual funds, credit card expenses, purchase of foreign currency, real estate transactions etc.
Keep an eye on such accounts
Under tax laws, banking companies have to give information to the tax department during the current year about those accounts in which ten lakh rupees or more have been deposited or withdrawn on a regular basis during a year. This limit is considered in aggregate for cash deposits of Rs 10 lakh or more in a financial year in one or more accounts (other than current accounts and time deposits) of the taxpayer. Aarti Raote, partner, Deloitte India, said that it helps the tax officer to ascertain the sources of funds, nature of receipts and whether the proper taxes have been paid by the taxpayer or not.
Must be aware of Income Tax Rule 114E
Thus, it is necessary to inform the tax authorities on cash deposits and withdrawals of Rs 10 lakh or more in a bank account in a financial year, so in such a situation, if there has been a transaction of Rs 10 lakh or more in your account, then You need to be careful. This limit in current account is Rs 50 lakh and above. However, apart from the transaction, there are some other transactions too which you need to be aware of. Kapil Rana, founder and chairman of Hastebook Limited, says that a person should be aware of Income Tax Rule 114E regarding income and expenditure made from accounts. So that he can withdraw or deposit only that much money from his savings account in a financial year so that he does not come under the income tax radar. Because transactions more than that are reported under Rule 114E of Income Tax Section 1962. ,
Banking Regulation Act 1949 applies to every banking company or co-operative bank which provides bank account facility. They are required to report the following transactions related to bank accounts –
- Excluding one or two accounts (current and time deposits) in which an amount of Rs 10 lakh or more is deposited in a financial year.
- Ten lakh or more has been paid in cash collection in a financial year for purchase of bank drafts, pay orders, bankers cheques, prepaid instruments issued by the Reserve Bank of India under Section 18 of the Payment and Settlement Systems Act 2007 .
A credit card issuing banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies or any other company or institution has to report the following transactions –
- Making cash payment of one lakh or more in a financial year against the bill of one or more credit cards issued
- Making payment of ten lakh or more in any mode against the bill of one or more credit cards issued.
A company or institution issuing bonds or debentures is required to report receipt from any person of an amount of ten lakh rupees or more for receiving bonds or debentures issued by the company or institution in any financial year. Bonds or debentures issued by a company (except the amount received on account of renewal).
If the company is issuing shares, it is necessary to report an amount of ten lakh rupees or more in any financial year to receive the shares issued by the company.
Under Section 68 of the Companies Act 2013, it is mandatory for a company listed on a recognized stock exchange to report the purchase of shares amounting to Rs 10 lakh or more from any person in a financial year.
The trustee of a mutual fund or other person managing the affairs of a mutual fund must report the receipt from any person of an amount of ten lakh rupees or more in the financial year for acquiring units of one or more schemes of the mutual fund. (Excluding the amount received due to transfer from one scheme to another mutual fund).
An authorized person referred to in clause (c) of section 2 of the Foreign Exchange Management Act 1999 is required to report receipts from any person amounting to ten lakh rupees or more in a financial year for sale of foreign currency.
The Inspector General appointed under Section 6 of the Registration Act 1908 or the Registrar or Sub-Registrar appointed under Section 6 of that Act is required to report any purchase or sale of immovable property worth Rs 30 lakh or more by any person.
Thus, before depositing or withdrawing any amount from the bank account, we have to ensure that while complying with the applicable provisions, we are not liable to pay tax under Rule 114E. Could.
