1. Introduction

High Value transactions are transactions which are incurred in high denominations. From last few years income tax department is shaking hands with all the other related Govt. departments from which it can procure financial information and trace all the persons who are spending high amount but are not filing income tax return or are not paying taxes according to income earned. The Govt. day by day is taking several measures to reduce tax evasion and for this it is adopting technology and is bringing its operation in digital mode.  There are 11 transactions which are closely monitored by income tax department. For the purpose of smooth reading let us consolidate it into 5 transactions and understand.

High Value Transactions under Income Tax Act

2. High Value Transactions

S.NO. HIGH VALUE TRANSACTIONS REPORTING AUTHORITY
(1) Cash deposit/ Withdrawal/ Fixed deposit made in bank account of Rs.10 lakhs or more in all bank accounts and Rs.50 lacs made in all Current accounts. Banks/Post Office
(2) Time deposits made, Purchase of Debentures or bonds, investments made in shares and Mutual Funds, buy back of shares by company, purchase of foreign currency of Rs.10 lacs or more. Bank/Post Office/ Companies/ Mutual Fund Trustee
(3) Payment made from credit card of Rs.10 lacs or more against bill raised of purchases or expenses or Rs.1 lacs paid in Cash. Banks
(4) Purchase or sale of immovable property whose Stamp Duty Value is Rs.30 lacs or more. Registrar/Sub-registrar
(5) Cash received for 2 lacs or more against sale of goods or services. Person who has received cash and is liable for audit u/s 44AB of Income-tax Act.

3. How Income-Tax Knows About Your High-Value Transactions-

Reporting Authorities like banks, post office, Registrars, companies are required to intimate about high value transactions to Director of Income-tax (Intelligence and Criminal Investigation) by filing Form 61A called Statement of Financial Transaction. Through this form Investigation Wing of Income-tax Department comes to know about your high-value transactions and then it checks whether such person has filed return of income or not. If return is filed whether income disclosed is true and taxes have been paid correctly or not.

4. Measures Taken By Income-Tax Department Income-tax Deptt. is actively taking measures to trace all the high value transactions:-

1) Revised Form 26AS-For this it has revised Form No. 26AS from 01st June 2020 and PART-E of Form 26AS shows information about High Value Transaction. In earlier years income-tax notices were issued on the basis of these information. In year 2018 cases for past 8 years were reopened and notices were issued u/s 148. Also notices was issued in year 2019 to persons depositing cash above 2.5lacs during demonetization.

2) Shaking Hands With Related Department For Exchange Of DATA- Income-tax Deptt. has signed MoUs with various departments as follows-

a) Memorandum of Understanding (MoU) was signed on 21st July 2020 for exchange of data between Department of Direct tax and Deptt of Indirect tax.

b) MoU was signed on 20th July 2020 for sharing of information between Central Board of Direct Taxes (CBDT) and Ministry of Micro, Small and Medium Enterprises.

c) MoU was signed on 8th July 2020 between CBDT and Securities and Exchange Board of India (SEBI) for data exchange.

3) Launched E-Campaign To Voluntary File Returns For F.Y. 2018-19– Giving one-time opportunity to person who has not filed return for F.Y.2018-19 or has filed return but is not in line with High Value transactions. CBDT has started 11 days e-campaign from 20th July and is sending E-mails /Messages to non-filers or in whose case discrepancies is noticed to voluntary file return so that they can avoid further income-tax notices and scrutiny.

4) Mandatory To File Return Of Income-Till F.Y. 2018-19 person (other than company or firm) was required to file return if income exceeds 2.5 lacs. In Budget 2019, Hon’ble Finance Minister Smt. Nirmala Sitaraman announced that from 1st April 2019 filing of Income-tax return is necessary even if your income does not exceeds 2.5 lacs and you have entered into High Value transactions i.e. deposited Rs.1 crore in current account, expended more than 2 lacs in Foreign travel or paid above 1 lacs towards electricity expenses..

5) TDS On Cash Withdrawal-From 01st June 2020 banks and post offices are required to deduct TDS if any person withdraws cash above 20 lacs or 1 crore based on their income filing status @ 5% or 2%.

5. 0ur Comments

All the persons who does High-Value transactions are in radar of Income-tax Departments. In maximum cases income tax notices are issued based on these High Value Transactions. So you have to keep yourself informed about all these transactions and file return accordingly. Let us bring into practice to avoid cash transactions so that income-tax notices can be avoided. Govt. is fastly moving towards digitization of its entire working system and now only good tax planning can save our taxes. Let us ensure to save taxes legally.

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The above comments do not constitute professional advice. The Author can be reached at divyaagrawal203@gmail.com. My name is CA Divya Agrawal and I am Practising Chartered Accountant. I also upload educational videos in You tube and name of my channel is FINANCIAL TREE COMPANY. My aim is to help people in improving their financial health by spreading knowledge and love. Stay Healthy and Wealthy.

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35 Comments

  1. JAGADISHKUMAR says:

    IF SOME ONE
    TURNOVER 1.60 CR AND
    CASH DEPOSIT IN CA ACCOUNT MORE THAN 75 LCKS (ANNUALY) SHOWN IN 26 AS.
    LIABLE FOR AUDIT / FILE UNDER 44AD…
    PLEASE ASSIST..

    1. Divya Agrawal says:

      If assessee is an individual or HUF and turnover is upto 2 Crores than they have an option to opt 44AD. If they do not want to opt 44AD than they can opt tax audit. Filing of return is necessary if assessee has deposited cash of more than 1 crores in current account. In your case if Individual assessee is considered than, it is not compulsory to do tax audit. They have an option to opt 44AD.

  2. T c pathak says:

    I transferred rs 10lac to my wife also an assesee from my retirement pf money after closing an TDR from my saving SBI account,
    It is also showing in her 26as as SFT-005,She is filing itr due to a annual rental income below 2lac,will this family transaction as gift be liable to included with her regular income for tax assessment in her itr as the money was not earned by her but was my hard earned retirement emoluments and it’s TDR on my account was already taxed earlier by sbi

  3. Yash says:

    If an individual had deposited an amount of rs -75 lakh in bank A schedule bank and 30 lakh in bank B ….is he liable to file Return of Income?

    1. Divya Agrawal says:

      Dear Sir,
      Hope you are taking good care of yourself in this pandemic.
      As regards your query Aggregate of all deposits made in all Current account accounts whether cash or cheque is to be taken into consideration. Therefore in your case he is liable to file ITR

  4. Juzer T Attarwala says:

    Sir,
    I just wish to know about any extensions for filing TDS returns of 4th quarter of 2019-20? Because I had read on Google three days back for the same. But later on that news were removed how? I didn’t understand why? So I wish to confirm weather any extensions are given or not? Otherwise I know that it was 31st July 2020. Please clarify. Thanks.

  5. Ravikumar says:

    If in Form 26AS , it is cited as SFT whether the Tax Payer needs to do anything?

    2. If a retiree continues his Provident Fund with the Provident Fund Trust, even after retirement, while declaring the interest income for the Tax purpose, can he calculate the interest earned on the portion which has accrued after his retirement date, for when he was in service PF is not taxable.?

  6. Anurag says:

    Hi All,

    Before BJP not in power always talk about soniya gandhi,vadara, Mulayam Singh Yadav and many more for balck money.

    But nothing happens so far since more than 6 year ,what income tax department doing only focus on middle class person.

  7. CA Dinesh Deswal says:

    8 years case can not be opened in normal course, you are wrong in fact and law both.

    High value transactions much more what you have mentioned.

    Mandatory to file the income tax return even if income not exceed 2.5 lakhs came in 2019 budget not in 2020 budget. You should workout before publishing article

    Some information are useful e.g. MOU reg. if these are correct, as i have read only with indirect tax.

    1. divya1990 says:

      Rectified the tying error. Thank you for guidance and sorry for the inconvenience. Every one here are in learning stage and we humans are allowed to do unintentional errors. Hope my readers understands the meaning of article and avoid typing error. Next time I Will keep in mind your learning. Thank you for your guidance Sir.
      Thanks and Regards

  8. Abhinav says:

    IS there any specific column in ITR-1 to file the Foreign currency purchased for education fees payment of daughter (SFT-011 in 26AS)

    1. divya1990 says:

      As such there are no coloumns for purchase of foreign currency in ITR-1. You have to show your correct income in ITR. If anyone else wants to throw light on this issue are welcome. It will be a learning.

  9. Prasad Putcha says:

    The Value as per The Sub-Registrar is that amount of the Value pitched up by the Registrar, even though the Sale consideration might be low, even then as per Section 50C of the Income Tax Act, the SRO Value will be picked up and Notices for non-disclosure or improper disclosure could be issued and the difference of the amounts between the SRO Value and the Sale Consideration will be added as Unexplained Investment / Income.

    1. TIRU C NARAYAN says:

      By “The Value as per The Sub-Registrar” do you mean Stamp Duty Value? Even if it is higher than the actual sale value, can we not explain the difference by showing the registered sale value? That should reconcile the “Unexplained Investment / Income”

  10. GANDHI MOHAN BHARATI says:

    Multiple short term deposits, example 5Lakhs invested for 7 days each in time deposits with a bank, 20 times in a year, with a gap in between, will make it more than 10 Lakhs in a year; and attract SFT whereas the same deposit renewed will not count for SFT – Funny Logic

    1. Krishnan S says:

      26-AS Statement Has Not Been Updated After The
      First Quarter of Financial Year 2019 – 20
      April 2019 To June 2019 By Company ;
      Form 16 Also Not Issued Even Though TDS
      Recovered ? What Action Govt. / IT Deptt. Will
      Take Againt Them ; And IT / Govt. About It
      In The Newspapers And The Tax – Payer Concerned ; Things Should Not Be One – Way
      Traffic .

    2. divya1990 says:

      Fresh investments made above 10 lacs in a financial year is under radar of income tax. If it is renewed than there is no fresh investment made and therefore excluded from SFT. In your case we have to explain that the money withdrawn is again re-invested after few days but it will considered by income tax deptt as big ticket transaction. It is practical problem which has to be explained to Assessing Officer.

      1. GANDHI MOHAN BHARATI says:

        The intention could have been better achieved had the law said that if the aggregate deposits increased more than 10 lakhs in a year in a bank rather than the present wording which is bound to create problems; or atleast the 26AS could have shown the deposit date, amount date of withdrawal.

  11. Joe Rathinam says:

    Most of the income tax evations are by accounting the black money by means of income from agriculture. It will be better to limit ceiling if income from agriculture say Rs. 10 lakhs per annum instead of unlimited income.

    1. TIRU C NARAYAN says:

      Another source of black money is a buyer wants to dump his black money to the sellers during the property sale transaction. How to prevent this….

    1. Awasthi SK says:

      I suppose, Divya Ma’am is trying to say, SALE CONSIDERATION – the amount agreed between seller and purchaser, as mentioned on the sale deed.

    2. Khaleel says:

      Document value of the property.
      Say Mr.X sold the land for a sum of 45,00,000/- to Mr.Y
      That 45L will be considered as high value transaction.

      1. divya1990 says:

        If Value ascertained by Stamp Valuation Authority is more than 30 lacs, then the transaction will be considered as High Value Transaction. In your case if sale consideration and SDV is same then it will be considered as High Value Transaction.

    3. divya1990 says:

      It is value ascertained by Stamp Valuation Authority. The value on which stamp duty is paid at the time of purchase/sale of property is Stamp Duty Value.

    1. divya1990 says:

      Oh, It is for F.Y, 2018-19 only. Thank you for your guidance. Sorry Sir, there is typing error,It needs to be corrected. Thank you so much.

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