Are your cash transactions being monitored by the taxman?

If you spend more than you withdraw then the Taxman would come for you.

We live in a digital world and leave our digital footprints everywhere.

In case the tax department finds that there is a discrepancy in the income and your spendings then the tax department is likely to send such citizens a notice.

first red flag while shopping

A lot of people do not withdraw their salary and instead continue to live a lavish lifestyle using a cash inflow that is not accounted for.

At the time of filing their tax return they account for only the salary that is deposited in their bank account.
On the other hand they continue to live lavishly and spend on expensive things and services, be it eating out at expensive restaurants, buying club memberships, travelling in style or splurging on goods like expensive watches.

All these expenses are made in cash in the hope that the expenses would not be tracked back to them.

The Tax department is getting smarter

Nowadays the tax department is using more and more technology backed tools to mine data about the income tax payees.
Using AI it is becoming easier to create a 360 degree profile of any individual. Right from every single penny you earn to the services and products you buy in cash are being monitored by the tax department sleuths.

Based on the information these guys at the tax department mine they create detailed reports abouts expenditures and income. In case they find there is a discrepancy in your income and the spending is considerably less and yet the tax department finds that you are living a lavish lifestyle then they can send you a notice.

What is asked in the notice?

The tax department notice would ask you to furnish the details about all the expenses that you make including the school fee to the day to day expenses and cash transactions.

From where does the tax department get so much information about you?

The tax department has been making a lot of efforts about the kind and details of information it gets about you.
All your financial details are listed in the TIS and AIS report that is a detailed report about all your transactions and readily available to the tax department at the click of a button.

All your information is interconnected

Right from your mobile number to your PAN and adhaar card number is linked to your bank and this information is available to the tax department.

The cash transactions are also traceable

Even though some people may think that their cash transactions are not traceable, even when they make a cash transaction they do share their email, mobile number etc with the merchants. All this information can be mined by the tax department and as a result if they find or suspect that there is a discrepancy they can simply send you a notice.
Simply put, the notice would ask you for details about your transactions.
In case the income and expenses do not match then there can be further action that many be taken against a user.

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Posted Using INLEO