Many are bewildered when the Income Tax Department serve them notices seeking details of private land deals. People often wonder how the IT gets details about transactions that are scrupulously done under the wraps. However, most of our financial transactions are on the watchful radar of the IT Department. The IT department can easily gain access to the details of all your deals through the authorities registering the transaction. The departments/institutions/agencies involved in the procedure could pass on the information to the department without intimating the parties involved in the transaction.
There are financial transactions about which the department could have a beforehand knowledge. Some of them are:
It is mandatory for banks and financial institutions, that come under the section 51 of Banking Regulation Act, 1949, to disclose the details of customers who have deposited cash of Rs 10 lakh and above in their savings bank account during a financial year. If the customer holds accounts in different branches of the same bank, the details of all the accounts and transactions should be reported.
Credit card payments
Banks, financial institutions or companies need to inform the IT department if the aggregate payment made using credit cards issued to a particular customer exceeds Rs 2 lakh.
Bonds, debentures and shares
Institutions or companies are required to report the details of investments of Rs 5 lakh or more in bonds or debentures issued by them to an individual. Furthermore, if an individual earns Rs 1 lakh and above by selling shares or through right issue, it should be mentioned in the tax return.
Registrars and sub-registrars have been instructed to report purchase or sale of any immovable property valued at Rs 30 lakh or more while filing the Annual Information Returns (AIRs). The rule is applicable to agriculture and non-agriculture land in urban or rural areas.
Mutual funds have been mandated to report receipts of Rs 2 lakhs or more for purchase of their units in the annual AIRs.
The Reserve Bank of India (RBI) is obliged to report purchases of its bonds worth Rs 5 lakhs or more in a year. Except RBI bonds, the details of all other transactions should be reported along with the PAN (Permanent Account Number) of the customer.
Individuals and institutions having taxable income, businessmen with a total income of Rs 5 lakh and more, charitable and religious trusts without tax exemption, those who have obtained the import export code, service tax payers, and dealers registered under Central/State Sales Tax need to mandatorily furnish their PAN details. Quoting wrong PAN would invite a penalty of Rs 10,000. It is illegal to possess more than one PAN.
A tax payer can check the Form 26AS under AIR section, which would be uploaded on the Income Tax India E-filing website, to crosscheck the details of the transactions made by him/her before filing the income tax return