Income tax rules to be kept in mind when stepping outside our country
The detailed monetary activities described by the various organisations/ institutions are reflected in the taxpayer’s form 26AS
In the post-pandemic times, it is worth mentioning that if you are planning to travel abroad sooner or later, there’s a cap on the upper limit for buying US dollar or any other foreign currency via cash. Thereafter, the income tax department shall be intimated and you’ll come under the radar of the I-T department. If the transactions do not match the declarations made in your income tax return, the I-T department will send you notice.
What are the rules for cash transaction?
Amongst several designated companies/ organisations, currency changers and banks are mandated to notify set financial activities yearly in Form 61A to the income tax authority, below section 285BA of income tax act, 1961. The detailed financial deals involve the acquisition of foreign currency of an amount aggregating to Rs 10 lakhs ( 1 million) or higher in a financial year from money changers or banks or additional approved bodies under foreign exchange regulations. The above-mentioned explanation further includes:
• The credit of the foreign currency transaction to the foreign exchange card.
• The expenses that have been incurred in the foreign currency through the credit card or debit card or even the traveller’s cheque or lastly any other instruments.
Reasons for the aforesaid vigilance by I-T department?
The rationale behind such vigilance is but natural to keep an account of the high-value transactions that are being undertaken by taxpayer and if the details mentioned in ITR and high value transactions are not in sync then to take the apt action against taxpayer for not disclosure of facts and figures or in other words trap the lie, cheat and other non-transparent attitude of the taxpayer.
The detailed monetary activities described by the various organisations/ institutions are reflected in the taxpayer’s form 26AS. Within that taxpayer can guarantee that the income reported to before-mentioned related activities is properly submitted to tax and revealed in their income tax return.
What should the taxpayer do if trapped?
• The taxpayer should submit the detailed explanation of the aforesaid discrepancy and not to forget along with the necessary documents to the I-T Department.
• The submission to the I-T department should involve majorly the following aforesaid items.
• Explanation of the sources of income
• Taxes that have been paid in case of the aforesaid income.
• In essence or to conclude, while travelling abroad and in general, it is better to stick to the norms that have been prescribed by the I-T department and other government agencies while travelling abroad than to invite trouble.
(The author is Co-Founder and MD, SAG Infotech. Views expressed are personal.)