Limit of bank transaction for income tax
C.NOWSHAD
(Querist) 05 January 2012
This query is : Resolved
my client deposit the excess amount of money in bank after his expenses and he does all transactions through his saving bank account. if required, he used to withdraw from the account.... The question is whether he is liable to pay income tax on the total amount he deposited in his account(from which he withdrawn for his expenses and again deposit) or income tax on the amount of deposit at the end of that particular year..?
Raj Kumar Makkad
(Expert) 05 January 2012
Income tax do not depend upon the deposit in the bank account. It is levied upon your income whether it is deposited in the bank or is retained in cash with you.
Expenses are reflection of income. If a person is capable to incur heavy expenses it means he has sufficient income for which he should pay income tax.
Deepak Nair
(Expert) 06 January 2012
Income tax is deducted on the basis of early income. Your client will be taxed if he is earning anything equal to or above taxable income.
It is better to obtain the views of a CA in such cases.
malipeddi jaggarao
(Expert) 06 January 2012
Irrespective of transactions in the Bank account, income has to be computed as per IT Act. If it is in excess of Rs.180000 the balance is the taxable income. Ofcourse, the IT authorities can question the assessee about the source of income for the deposits he has made in the bank account for which he is supposed to explain. But payment of income tax do not depend upon the deposits and withdrawals in the bank account. Withdrawal and redeposit are not way linked with Income Tax. Only point to be kept in mind is, the assessee should be in a position to explain the source for deposits in the bank account and this source money should have been declared as income for assessing the tax liability.
prabhakar singh
(Expert) 06 January 2012
It is not deposit and withdrawal but actual income earned through source(s) is taxable when this FY it exceeds Rs.180,000/=.
Any way what your client do?Business,then he needs A/c book to be maintained.
More over what you do when he is your client?
ask him to seek help of a tax lawyer.
Rajeev Kumar
(Expert) 06 January 2012
I agree with all experts
R.Ramachandran
(Expert) 06 January 2012
Dear Mr. Nowshad,
Your client should have appropriate reasons / justification to show as to what is the source of money when he deposited the same into the bank.
Similarly, he should have adequate details supported by documents to show what he did with the money which he withdrew from the bank.
As already indicated by the experts here, if he has taxable income, then he is liable to pay income tax.
It would be advisable for your client to approach a lawyer (who is well versed in tax matters - especially direct tax matters) or a Chartered Accountant without wasting precious time.
C.NOWSHAD
(Querist) 06 January 2012
thank u experts....
Deepak Nair
(Expert) 07 January 2012
Most welcome Mr.Nowshad
