Generating revenue through income tax collection is the major source of income for the Government of India. The massive pool of funds every year is utilised efficiently to back up several public welfare schemes, regulate the economy, and support government-based employment schemes. That’s why for the income tax department it is highly necessary to keep a watch on every suspicious transaction which aims towards hiding or stealing income tax. There are specific types of transactions which attract the Income Tax Department to investigate.
Here’re the Top 10 Transactions that Alert Income Tax Department
Higher Donations or Education Fee
- If you are paying more than ₹1 lakh as an education fee or donations then it will alert the Income Tax Department to further investigate the transaction. Moreover, the institutions are required to issue form 16A to the parents of children if they are paying more than ₹1,00,000 per annum.
Paying an Electric of ₹1 Lakh P.A
- Suppose you have a large property which generates an electricity bill of more than ₹1 Lakh P.A. In such cases, your transactions can be investigated by the income tax department questioning the source of funds.
Domestic and Foreign Travel
- “If you travel by air, especially in business class or abroad, the Income Tax Department can question the source of funds used for such travel. Ensure that you keep all travel-related documents, such as flight tickets, boarding passes, hotel bills, and visa receipts, for tax filing purposes.”
Large Hotel Bills
- The Income Tax Department’s scanner detects your transactions if you are paying more than ₹20,000 for a hotel stay. So, ensure all the documents related to your journey are safe.
Luxury Items Worth Over ₹1 lakh
- Purchasing transactions of luxury items, like jewellery, marble paintings, etc worth more than ₹1 lakh attracts the focus of the Income Tax Department, to navigate the source of funds.
Balance or Deposits of Over ₹50 Lakh in Current Account
- If you made a transaction above the limit of ₹50 lahks or have the same amount of balance in your current account then the Income Tax Department may look into your transactions.
Having More than ₹25 Lakh in Savings Account
- The Income Tax Department will analyse your transactions if you have more than ₹25 lahks in your savings account or have made credit transactions equal to or greater than this limit.
Paid Property Tax Above ₹20,000
- If you are paying property tax equal to or greater than ₹20,000, the income tax department may look into it.
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Paid Life Insurance Premium of ₹50K
- “If you pay more than INR 50,000 as a life insurance premium, the Income Tax Department will analyse it. Ensure that you keep all related documents, such as insurance policy documents, receipts, and bank statements.”
Health insurance premium of 50K
- “If you pay more than INR 50,000 as health insurance premium, the Income Tax Department will evaluate it. Ensure that you keep all related documents, such as insurance policy documents, receipts, and bank statements.”