In the post-pandemic times, it is worth mentioning that if you are planning to travel abroad sooner or later then the cash transaction for buying US dollar or any other foreign currency is allowed only upto a certain limit. Thereafter, The Income Tax Department shall be intimated by the money changing department and I-T Department would start chasing you if it found that you are having disproportionate transactions as per declarations made in ITR . And finally, the Income Tax Department would start sending you the notices.
In the wake of two Corona Pandemics, the Airline Industry was closed and stalled. However, in post-pandemic time when everyday life is coming back on track slowly and steadily, the operations of airline Industry are also gaining momentum, however if you are planning to travel across the globe or length and breadth of a particular continent, keep the above-mentioned fact in mind while buying dollar from money changing institutions.
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.
Amit Gupta, the author of the article is Co-Founder and MD, SAG Infotech
The opinion herein is of the author and do not reflect the opinion of Greynium Information Technologies Pvt Ltd