Winners with high income with low control under control! Here's how I can avoid fiscal investigation - news with money

If your income is high, but the withdrawals and transactions are very small, then the income tax department may have their eyes on you. The income tax officials pay attention to the cases where there is a big difference between the declared income and the spending model. If the declared income of a person is great, but cash withdrawals or digital expenses are small, then it can be considered an undeclared income and can start investigating.

According to (Dr.) Sush Surana, people with high incomes must ensure that digital withdrawals and transactions are aligned with the income declared to avoid control of fiscal officials. “A significant mismatch between the income report from tax declarations by taxpayers and their spending models, such as low cash withdrawals or minimum digital transactions, despite high incomes, can raise concerns about undeclared income, which leads to potential controls or fiscal investigations.”

What to do to avoid fiscal investigation?

If you want to avoid doing investigations, keep in mind the following things:

Declare all the sources of income

Deposit all income, such as salary, rental revenues, capital earnings, business income, interest and dividends in the income tax return (ITR). If the income is under-reported or reported, it can raise suspicion.

Maintain appropriate financial records

Keep a full registration of cash withdrawals from the bank, UPI payments, credit card expenses and other financial transactions. If the income tax department makes an investigation, it is important to have the correct documentation, says Surana.

Avoid excessive cash transactions

Surana suggests taxpayers to maintain bank and digital transactions in accordance with their real income and lifestyle. If there are large large cash deposits or an unexplained increase in bank balance, this may increase suspicion.

Possible consequences of difference in declared income and transactions:

If the reported income of a person and his bank or digital transactions show a big difference, it may have serious consequences:

Tax notifications and control

The income tax department can send notifications in accordance with sections 131, 133 (6), 133a, 132 and 143 (2) and initiate a thorough investigation.

Reassessment and investigation

If irregularities are found, the department can re -examine the entire taxable income of the person.

Penalty and interest fees

If undeclared revenues are found, a heavy penalty in section 270a may be required.

Penalty of up to 50% on under-reported income.

Penalty of up to 200% on wrongly reported income.

Also, the additional interest rate may be paid in section 234A/b/c.

Criminal prosecution and imprisonment for tax evasion

If the income is deliberately hidden and the amount is more than 25 lei RS, then in section 276C, there may be a 2 -month imprisonment term, Surana explained, adding that, in other cases, there may be a 2 -month imprisonment.

Impact on bank and credit score

If someone has to face frequent tax investigations, then the monitoring of the credit score and financial transactions may increase.

What are the reasons why the income tax department to forget?

Some transactions may prove to be a red flag for the income tax department. These include:

Large digital payments

If a person has upi, credit card or online transactions of more than Rs 10 Lakh in a year, it is reported in the State of Financial Transaction (SFT), and the income tax department can see it in the annual information summary (AIS) and the summary of tax information (TIS).

Purchase of expensive goods

If a person buys expensive cars, properties, design brands or gold and silver, but the declared income is very small, then it can raise suspicion.

Large cash transactions

If a person has a cash deposit of more than Rs 10 Lakh in his savings account or more than Rs 50 Lakh in his current account, then this information is sent to the income tax department.

Big investments in stock market or crypto

If a person trades in stocks, derivatives or cryptocurrencies in large quantities, but does not report it correctly in ITR, then it can be under control.

Summarizing

If you want to avoid tax control and unnecessary opinions, report the income correctly and keep all the financial documents safe. The payment of taxes honestly is not only a legal obligation, but it is also the best way to avoid any problems in the future.