To check tax evasion, the Income Tax Department has stepped up its vigilance against undeclared income. Now, you have to report PAN on all your high-value transactions. Property registrars and financial institutions with which you deal with like your bank, insurer, mutual fund company and credit card company feed the tax department with information regarding your big transactions.
- You have to report PAN on all high value transactions
- Registrar has to report purchase or sale of property over Rs 50 lakh
- A 1% luxury tax is levied on purchase of car priced over Rs 10 lakh
The tax department compares this information with the return filed by you. "Through these reporting the tax department is trying to compare your overall income with your expenses and investment to assess the correct tax liability and finally the evasion if there is any," says Sudhir Kaushik, CEO and co-founder of Taxspanner.com.
Here are some of the ways through which the tax department is monitoring your high-value transactions:
1) Your bank will inform the tax department if you have deposited cash, made a demand draft or fixed deposits aggregating up to Rs 10 lakh or more in a financial year under different accounts.
2) The property registrar is liable to report purchase or sale of immovable property exceeding Rs 30 lakh.
3) Now, TCS (tax collected at source) at the rate of 1 per cent is deducted and deposited to the tax department by the buyer in case of purchase of property over Rs 50 lakh. This is just another way of reporting the transaction.
4) If you have made a cash payment of Rs 1 lakh towards your credit card or Rs 10 lakh or more through any other mode during the financial year, your credit card company will report the transactions to the tax authorities.
5) Purchase of shares, debentures and mutual funds of Rs 10 lakh or more will have to be reported by the companies to the tax authorities.
6) If you are earning more than Rs 50 lakh a year, you have to report your assets and liabilities in a new ITR (income tax return) form this year.
7) Now reporting of PAN is mandatory for making any purchase of goods and services of more than Rs 2 lakh. Also, a TCS (tax collected at source) has been introduced from June 1 in case of purchase or sale of any goods and services for Rs 2 lakh and more in cash.
8) According to experts, TDS is another way of tracking income of tax payers. Banks deduct TDS if interest income on fixed deposits is more than Rs 10,000 in a year.
9) A 1 per cent luxury tax is levied on purchase of car priced over Rs 10 lakh. It will be deducted by the seller of the car and will be applicable on ex-showroom price. However, this extra payment could be set off against the total tax liability of the buyer.
10) You also have to give your PAN for the following transactions:
a) Sale or purchase of vehicles other than two-wheelers
b) Opening a bank or a demat account; applying for credit card
c) Opening a fixed deposit of more than Rs 50,000
d) Payment of more than Rs 50,000 towards insurance premium
e) Paying more than Rs 50,000 in cash towards restaurant or hotel or foreign trip bills
f) Purchase of mutual funds, debenture, bonds worth more than Rs 50,000
g) Depositing cash or more than Rs 50,000 in bank