Income Tax Notice: The aim of the Income Tax Department is to ensure compliance with tax rules in the country. If a person violates the rules or does not keep track of certain expenses, he may receive a tax notice. In this blog, we will understand which expenses are monitored by the Income Tax and why even common people can receive a tax notice.
Keep an eye on large cash transactions
If you deposit or withdraw large amounts of cash through a bank or any other medium, the Income Tax Department can investigate it.
Limit: Cash deposit or withdrawal of more than ₹10 lakh.
Example: If someone deposited ₹15 lakh in cash but did not disclose its source, he may get a notice.
Excessive use of credit card
If you make a large credit card payment every month, the department may check whether your income justifies this expenditure.
Limit: Cash credit card bill payment of more than ₹1 lakh.
Digital payment: Digital payment of more than ₹10 lakh.
Foreign travel expenses
If you have spent big on foreign travel, the income tax department would want to know if your income was sufficient to cover it.
Limit: Expenses over ₹2 lakh.
Example: Spending ₹5 lakh for a trip to Europe with family and not showing it in the income tax return.
Property purchase
If you buy expensive property, the department may check whether the source of money you have is legitimate or not.
Limit: Property purchase above ₹30 lakh.
Share and mutual fund investments
If you have made a big investment in the stock market or have made profits, then it is necessary to show it in the income tax return.
Limit: Investment of ₹10 lakh or more.
Expenses on weddings or other big events
Those who spend on big weddings or other events are also scrutinized. If this expenditure is not in accordance with your income, you may get a notice.
Limit: Events costing more than ₹5 lakh.
Cash donation or charity
If you have donated a large amount in cash, this may also come under scrutiny.
Limit: Cash donation of more than ₹2 lakh.
The rules of the Income Tax Department are for everyone. Common people should also follow the tax rules and give correct details of their income and expenses. If you follow the rules, the chances of getting a tax notice are greatly reduced.
