In any given economy, cash transaction plays a major role in accumulation of black money.
The Indian Income Tax Department is watching like a hawk and has their eyes on any higher value cash transaction deals that are happening. Any trigger and they get in action. Hence investment platforms like mutual funds houses, banks or broker platform discourage cash transactions and promotes the use of digital payment and have a set limit up-to which one can invest in cash..
Income tax department is very vigilant about high value cash transactions. You will get a notice from Income tax department if you violate the set limit while transacting in cash above this set limit. So let’s look at the 5 investment avenues and the cash transaction limit set on them.
- Mutual Fund/stocks/ Debentures/Bonds: People investing in any of these must ensure that the cash transaction doesn’t cross the 10 lakh limit. Failing to maintain this limit will lead to notice and checking of your last income tax returns by Income Tax Department.
- Saving Account/Current Account: The cash deposit limit is tapped at 1 lakh rupees for savings account for an individual and the limit set on current account is 50 lakh rupees. Any violation of this limit will invite a notice from the Income Tax Department.
- Bank Fixed Deposit: While bank allows cash deposits to be made towards fixed deposits, it tap for the same is set at 10 lakh rupees. Any breach of this limit will attract the attention of Income Tax department.
- Real Estate: Income tax department discourages any cash transaction over and above the limit of 30 lakh for buying and selling of any real estate or property deal. Property registrar will have to report such transaction done for any non-moveable property.
- Credit Card Bill Payment: Cash payment done towards the credit card bill payment that shoots above 1 lakh rupees doesn’t go well with the income tax department and will bring you in to their notice. Furthermore, if anyone pays more than 10 lakh rupees in one financial year to settle the credit card dues, raises a red flag and the Income tax Department will get digging into your details.
Transacting in big ticket aka Cash can get you in trouble with the Income tax department who keeps a close watch on where all the money is coming and going. Hence it is very important to plan your finances such that you never have to come across this situation which can trigger an action from the Income Tax Department’s end.