Skip to main content

Didn't quote PAN with high-value transactions?

With the income-tax (I-T) department planning to issue 700,000 letters to individuals who have done high-value transactions without declaring their permanent account number (PAN), many individuals may face scrutiny.
The I-T department has zeroed in on transactions, which included cash deposits of over Rs 10 lakh in a bank account and sale or purchase of immovable property of Rs 30 lakh or more over the past seven years (since 2009-10). The department gets data of high-value transactions under the annual information return (AIR).
Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP, says the first thing to be taken into account would be whether the I-T returns have been filed or not. If returns have been filed, the next question would be on the source of income and whether tax has been paid or not. For this, one should keep the necessary documents safe and ready. For example, if one has purchased a property of over Rs 30 lakh, but funded the initial down payment through a loan from a bank or relative, he will need to produce the documents for the same.
“There is a concept called unexplained investment under the Income Tax Act, 1961. So, if you are not able to explain the source of investment or where the explanation is not satisfactory, you can be taxed on the value of unexplained investment,” says Maheshwari.
Of course, things could get trickier if there was a huge mismatch between one’s investment and income. For example, a property purchase of over Rs 1 crore with annual taxable income of Rs 10 lakh will attract a lot of questions. The I-T department would assume that the investment was made from income earned from undisclosed sources. This will be added to his income and taxed accordingly. One will also be subject to penalty.
“If the transaction cannot be explained, then it will lead to proceedings and the onus is on the individual to prove that the income was declared,” says Arvind Rao, a Mumbai-based chartered accountant.
In case you get such a letter, the response should be with specific documents, depending on the nature of the transaction, says Divakar Vijayasarathy, chief executive, MeetUrPro. You will need to show the I-T return filed for that year, along with the source of income. For example, if you paid for your car’s down payment using credit card, show the credit card statement. Also, show the car loan sanction letter and the bank statement.
In case you haven’t disclosed the income, declare it under the Income Disclosure Scheme (IDS), which is open till September 30 and get away with lesser penalty. “Until last financial year, the penalty was 100-300 per cent of tax liability, plus the applicable interest. So, assuming you had assets worth Rs 50 lakh, which were undisclosed and acquired five years back, today you would have ended paying Rs 75-80 lakh as tax plus penalty. If you use the window to declare it, you can pay 45 per cent tax and be done with it,” says Vijayasarathy.
Remember, if there is a proceeding against you in the I-T department, the IDS will not be applicable.
I-T DEPARTMENT WILL ASK ABOUT:
Cash deposit of Rs 10 lakh or more without PAN
Property transaction of Rs 30 lakh or more without PAN
Why tax return was not filed for that year?
If return was filed, the source of the funds/investment
Whether tax has been paid?
DOCUMENTS TO SHOW:
I-T returns if filed
Bank accounts to show source of funds
Credit card statements to show payment
Business Standard New Delhi,  27th July 2016

Comments

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...