Tax: Are you also making this cash-related mistake? The Income Tax Department can send you a notice at any time..

These days, almost everyone has a savings bank account. In fact, people use this account extensively for salaries, pensions, online payments, bill payments, and small and large savings.  Bank accounts offer the security of money and the convenience of digital transactions, but some habits can get you into trouble.  Specifically, if you repeatedly withdraw large sums of cash from your savings account, it can attract the attention of the Income Tax Department.

The government is now much stricter about cash transactions. The main objective is to completely curb black money and catch tax evasion.  Therefore, the Income Tax Department may question or send a notice to those who repeatedly withdraw cash or suddenly deposit large sums of money.

When does the Income Tax Department take notice?

Repeated large cash withdrawals trigger an alert for the department.
Banks report such transactions to the IT department.
An investigation begins if the transactions don't match your income.
If there are suspicious transactions, an income tax notice may be issued.
Not only withdrawals, but sudden cash flow also raises suspicion.
The Income Tax Department keeps a close eye on such accounts.
Trouble can increase without proper records.

What do the banks' cash withdrawal rules say?
Every bank has completely different cash withdrawal rules.
Only a limited number of transactions are free per month.
After the fixed transaction limit, extra charges apply.
Frequent cash withdrawals are recorded.
Withdrawals exceeding the limit trigger an alert.
Information is shared with the Income Tax Department when necessary.
Responding to a notice is mandatory.
Failure to respond may result in a penalty.

Be alert even when depositing cash
Depositing too much cash can also cause problems.
Cash deposits exceeding ₹10 lakh in a year trigger an alert.
Banks report such cases to the IT department.
The Income Tax Department investigates the source of the funds.
Questions arise if it doesn't match your income. You may receive a notice if you don't maintain proper records.

How to avoid trouble?
To avoid income tax notices, minimize cash transactions.
Use digital payments as much as possible.
Don't forget to maintain complete records of your income and expenses.
Don't panic if you receive a tax notice.
Respond to the notice with the correct documents.
Yes, a little caution can help you avoid legal hassles. (Note: This news is based on general information; for more details, consult a financial advisor.)

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