28 Nov 2016 14:39 IST

High-value transactions: You are being watched

Look before you leap into high-value transactions

Worried that the taxman will be watching deposits aggregating to ₹2.5 lakh and above until December 31? Your hoard of ₹500 and ₹1,000 notes is not the only money matter you need to fret about.

Through what is called an ‘Annual Information Return’ (AIR) required to be filed by various institutions with which you have made big-ticket investments or purchases, the government has been keeping tabs on you all the while.

As part of the several measures to clamp down on black money in recent times, threshold limits for disclosure of some of the high-value transactions in the AIR were reset earlier this year. From June 1, 2016, the scope of transactions attracting tax collection at source (TCS) has been widened too. So if you are among the well-heeled, you must handle your high-value transactions with care and keep your record straight.

AIR requirements

You may be pre-occupied with the bundles of ₹1,000 and ₹500 notes you carefully preserved in your secret chamber. But this apart, several other transactions that you may want to get into or have undertaken in the past are under the taxman’s watchful eyes. For instance, a sum of ₹10 lakh may not be quite significant for you, given your wealthy disposition; but it is enough for the government to pay closer attention to you. .

If you make an aggregate investment of ₹10 lakh and above during a financial year in shares offered by a company, in one or more mutual fund schemes (excluding transfer from one scheme to another) or in bonds, debentures and time deposits (excluding renewals), the institutions where you have made these investments will share this information with the government through their AIR.

The ₹10 lakh (aggregate in a financial year) cut-off also applies to credit card bills and purchase of foreign currency in all forms. ( notes, credit to foreign currency card, expenses in foreign currency through debit/credit card/traveller’s cheques/drafts); payments of ₹10 lakh and above in cash (aggregate in a financial year) for purchase of drafts or pay orders are also not spared.

Outside of cash deposits aggregating to ₹2.5 lakh and above which will be looked into until December 30, 2016, cash deposits aggregating to ₹10 lakh or more in one or more savings accounts of a person are under the scanner at all times. If you buy or sell any immovable property for over ₹30 lakh (per transaction) or if the property is valued at ₹30 lakh and above, this will also be reported by the appropriate authority in their AIR filings. Form 26AS, a statement showing details of your TDS (Tax Deducted at Source), self-assessment tax payments, refunds due, etc., also captures your AIR transactions for every financial/assessment year.

Form 26AS can either be viewed through your net banking account or through your e-return filing account. It will hence help if you can keep all appropriate papers safely to prove genuineness in case the tax authorities question you.

Mandatory PAN

AIR is not the only way in which the government is tracking you. To create a trail for many other high-value transactions, quoting your PAN (Permanent Account Number) has been made mandatory in several cases. For instance, payment in cash of ₹50,000 at one time for hotel or restaurant bills or for purchase of foreign currency requires your PAN number.

Investments in various financial instruments such as bonds, mutual funds, debentures, etc, in excess of ₹50,000 in each of them also calls for your PAN.

Deposit of cash over ₹50,000 in one day, payment of insurance premium aggregating to or more than ₹50,000 in a financial year or purchase of any goods or services exceeding ₹2 lakh per transaction require disclosure of your PAN too. PAN is mandatory for those depositing ₹2.5 lakh and above in the aggregate until December 30, 2016, as well.

TCS axe

Thirdly, vigilance has also been stepped up by imposing a tax collection at source (TCS) for big-ticket transactions. In the last few years, sellers who receive consideration in cash for sale of bullion and jewellery have been collecting 1 per cent of the sale value as tax, if the consideration exceeded ₹5 lakh for jewellery and ₹2 lakh for bullion.

From June 1, 2016 onwards, consideration above ₹2 lakh received in cash for any other goods sold or services rendered will also attract TCS of 1 per cent. Consideration in excess of ₹10 lakh, be it in cash or otherwise, received on sale of motor vehicle will be charged a 1 per cent TCS too. With every move by the government, the noose is tightening for those who may have shades of grey and black in their wealth. It is best to keep your hands clean and your records in place to avoid punitive taxes/penalties/trials.

Recommended for you