ET Wealth | How the taxman tracks your money

Today, several financial transactions by individuals get captured by the tax authorities. ET Wealth lists the expenses and investments that are likely to get noticed.Transactions where quoting your PAN is compulsoryUnder Rule 114B, certain transactions require compulsory quoting of the individual’s PAN. This is usually for transactions above a threshold amount but in some cases it is mandatory irrespective of the amount involved.The tax department can reach out to the taxpayer holding the PAN card to ascertain source of income from which transactions have been done.PAN needed for these transactions irrespective of amount involvedPurchase or sale of any motor vehicle, excluding two-wheelerOpening an account with a bank, other than a basic savings deposit accountRequest to bank for issuing a credit or debit card Opening a demat accountPAN needed for these transactions above a threshold amountCash deposit in a bank or post office exceeds Rs 50,000 in a dayCash purchase of bank draft or pay order or banker’s cheque exceeds Rs 50,000 in a dayTime deposit with any bank or post office exceeds Rs 50,000 in a day or aggregating to more than Rs 5 lakh in a financial yearCash payment to a hotel or restaurant exceeds Rs 50,000 per transactionPayment in connection with travel to any foreign country or purchase of foreign currency exceeds Rs 50,000 per transactionPurchase of mutual fund units exceeds Rs 50,000 per transactionPurchase of bonds or debentures of any company, including bonds issued by RBI exceeds Rs 50,000 per transactionPayment of life insurance premium exceeds Rs 50,000 in a financial yearPurchase of prepaid instruments like money wallets or gift cards exceeds Rs 50,000 in a financial yearContract for purchase or sale of financial securities Rs 1 lakh per transactionPurchase or sale of shares of any company not listed on any recognized stock exchange Rs 1 lakh per transactionPurchase of bullion or jewellery exceeds Rs 2 lakh per transactiontonPurchase or sale of immovable property exceeds Rs 10 lakh per transactionHigh value transactionsUnder Rule 114E of the Income Tax Rules, specifi ed entities are required to report specifi ed fi nancial transactions by a taxpayer. These are recorded in the Annual Information Return (AIR) fi led by the entities.The tax department compares these reports with the income tax return fi led by the taxpayer.These transactions also get captured in Form 26AS of the taxpayer. You can check your Form 26AS under AIR section if any investment or expense has been categorised as a high value transaction.TRANSACTION AMOUNTCash deposits in one or more bank accounts of a person, including current accountRs 10 lakh or more in a financial yearTerm deposits (other than renewal of existing term deposit) Rs 10 lakh or more in a financial yearCash purchase of bank draft or pay order or banker’s chequeRs 10 lakh or more in a financial yearCash purchase of prepaid instrumentsRs 10 lakh or more in a financial yearPurchase and sale of immovable propertyRs 30 lakh or more per transactionBuying mutual funds, bonds, debentures and sharesRs 10 lakh or more in a financial yearBuyback of sharesRs 10 lakh or more in a financial yearBuying foreign currency through foreign exchange card or travellers’ chequeRs 10 lakh or more in a financial yearReceipt of cash for for any goods or services Rs 2 lakh or more per transactionPayments towards credit card billMore than Rs 1 lakh in cash OR more than Rs 10 lakh through any other modeTransactions where TCS and TDS are mandatoryThe taxman also gets information from tax deducted at source (TDS) and tax collected at source (TCS) reports. TDS is deducted when a taxpayer receives salary, interest income or dividend. TCS is collected by seller at time of receipt of payment for purchase of goods or services.New TDS rates applicable from 14 MayNATURE OF PAYMENT OLD TDS RATE (%) NEW TDS RATE (%)Interest received on securities, fixed deposits and dividend from MFs and company shares107.5Payment made for purchasing land or property10.75Payment of rent by individual or HUF exceeding Rs 50,000 per month53.75Payment made to professional or commission or brokerage of Rs 50 lakh and above53.75New transactions brought under ambit of TCS (will come into effect from 1 October 2020)Outward remittances in excess of Rs 7 lakh in a financial year: 5% Remittances exceeding Rs 7 lakh for purpose of pursuing education through a loan obtained from a financial institute: 0.5%Purchase of overseas tour plan: 5%Sale of any goods (other than exports) for value exceeding Rs 50 lakh: 0.5% (1% if buyer doesn’t provide PAN or Aadhaar number to seller)

from Economic Times https://ift.tt/2DrgsXt