Thursday, 19 January 2012

Income tax Verification on high value transactions

Income tax department verifying high value transactions from those who are not assessed for income tax or who have not furnished their PAN while making such transactions. Banks, Financial institutions and other concerned authorities are responsible for furnishing high value transactions of its customers or dealers to Income tax department.  The tax payer also had to declare their high value transactions while filing income tax return.  Now the individual tax payer should not declare such high value transaction along with their income tax return. The new income tax forms including Sahaj, Sugam, ITR 3 and ITR 2 do not have space to declare high value transactions. But it is mandatory to provide PAN number, while making any such high value transactions. The financial institution which deals such transaction will inform such information through AIR (Annual Information Return) to the Income tax department in specified format.

The economic times reported that while asking about the missing AIR space in the ITR,  a CBDT spokes person said that "We have dispensed the individual taxpayers from declaring it in their return," he repeated that  "If the AIR is missing from the individual's forms then that would be a reason to take up the return for scrutiny,"

The individual tax payer had to disclose the following high value transactions in any year.

Investment above Rs. 200000 in mutual funds
Investment of Rs. 500000 or more in company bonds, debentures or RBI bonds
Cash deposit of Rs. 1000000 or more in an year in any banks
Payment of Rs. 200000 or more for credit card bills
Transaction of immovable property of Rs. 3000000 or more

Now Income tax department verifying such high value transactions from those who are not assessed for income tax or who have not furnished their PAN while making such transactions. This special drive will be from 20th January, 2012 to 20th March, 2012. The CBDT (Central Board of Direct Taxes) issued proforma for query letters and responses to be issued to high value investors or spenders.

They have to explain the source of such high value transactions, whether it is accounted properly or explained in their IT return etc. Such individuals are liable to pay any tax dues regarding this high value transactions within the financial year ended 31st March, 2012. It is not necessary to visit the income tax office personally, if you are called for furnishing the details. You can send the details by speed post or registered post.

Sometimes the tax officials may visit the high value investors or spenders. In such cases you can verify his identity and if you have any complaints you can contact any high tax officials including assessing officer and commissioner. And you can ask the telephone numbers of the superiors of the visiting tax official.

There may be penalty for not paying tax properly up to 300% of the unpaid tax. Prosecution also may be there in some cases.

When you make any transactions including high value transactions, account it properly and pay proper tax if any. Do not forget to submit your income tax return properly. If you are not able to submit income tax return properly, get help from any consultant or professionals. The fee you pay for such a person is not a loss.

Income tax Verification of high value transactions 

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