The rationale behind this development is to urge assessees to mention such transaction while filing ITR and pay taxes if applicable. It aims to promote a non-adversarial regime between the taxman and the taxpayer. "We are going to act as an accountant for assessees", P C Mody, Chairman of CBDT told the media.

[Read: Are You Afraid Of Being A Victim Of Tax Terrorism In FY 2019-20?]

Mr Mody further stated that the tax department is empowered to obtain various information logs and data sets from multiple agencies and has a strong data analytics setup to work out the source and destination of high-value transactions.

The Union Budget 2019 prescribed inter-changeability of PAN and Aadhaar. Thus, individuals who do not have a PAN can quote Aadhaar for all 18 financial transactions where quoting of PAN is mandatory. This will further enable the government to keep track of such high value transactions.

[Read: Here's How The Tax Department Has Made Filing ITR Easy For Salaried Individuals]

The transactions where quoting of PAN is mandatory is specified in rule 114B of the Income tax rules and are as follows:

1. Sale or purchase of a motor vehicle (other than two wheeler)

2. Opening an account (other than a time deposit referred to at Sl. No. 12 and a Basic Savings Bank Deposit Account) with a bank/co-operative bank

3. Making an application to a bank/co-operative bank/any other company or institution, for issue of a credit or debit card

4. Opening of a demat account

5. Payment to a hotel or restaurant against a bill or bills at any one time in cash for an amount exceeding Rs 50,000

6. Payment in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time in cash for an amount exceeding Rs 50,000

7. Payment to a Mutual Fund for purchase of its units for an amount exceeding Rs 50,000

8. Payment to a company or an institution for acquiring debentures/bonds issued by it for an amount in excess of Rs 50,000

9. Payment to the RBI for acquiring bonds issued by it for an amount exceeding Rs 50,000

10. Cash deposit with a bank/co-operative bank for value exceeding Rs 50,000 during any one day or aggregating to more than Rs 2.5 lakh during the period November 9, 2016 to December 30, 2016

11. Purchase of bank drafts/pay orders/banker's cheques from a bank/co-operative bank in cash for an amount exceeding Rs 50,000 during any one day

12. A time deposit with bank/co-operative bank/post office/Nidhi/Non-Banking Financial Company for an amount exceeding Rs 50,000 or aggregating to more than Rs 5 lakh during a financial year

13. Payment for one or more pre-paid payment instruments to a bank/co-operative bank/any other company or institution in cash or by way of a bank draft/pay order/banker's cheque of an amount aggregating to more than Rs 50,000 in a financial year

14. Payment of life insurance premium to an insurer for an amount aggregating to more than Rs 50,000 in a financial year

15. A contract for sale or purchase of securities (other than shares) for an amount exceeding Rs 1 lakh per transaction

16. Sale or purchase, by any person, of shares of a company not listed in a recognised stock exchange for an amount exceeding Rs 1 lakh per transaction

17. Sale or purchase of any immovable property for an amount exceeding Rs 10 lakh or valued by stamp valuation authority referred to in section 50C for an amount exceeding Rs 10 lakh

18. Sale or purchase, by any person, of goods or services of any nature other than those specified at Sl. Nos. 1 to 17 above for an amount exceeding Rs 2 lakh per transaction

[Read: How To e-File Your Income Tax Returns In Few Easy Steps...]

The government has also proposed amendments to Section 139 of the Income Tax Act to make income tax return filing mandatory for certain high spenders even if their total income is under the maximum amount not chargeable to tax. The move aims to increase the taxpayer base by ensuring that those who have the ability to incur large expenditure fulfil their duty of paying taxes and file income tax returns on time.

The amendment will take affect from April 1, 2020. Individuals carrying the following transactions will be mandated to file ITR:

1. Payments towards electricity consumption bill of more than Rs 1 lakh per annum

2. Making deposits of an amount or an aggregate of the amounts exceeding Rs 1 crore in one or more current account

3. Expenditure on travel to a foreign country for self or others for an amount exceeding Rs 2 lakh

4. For claims on the rollover benefit of exemption from capital gains tax on investment in specified assets like houses, bonds, etc., if prior to the claim of the rollover benefits, total income is more than the maximum amount not chargeable to tax

Assessees should discharge their constitutional duty responsibly and morally by reporting all their income. Failing to do so may attract notice or penalty from the tax department.

[Read: 10 Benefits Of Filing Your I-T Return On-Time]

The Income Tax Act allows various provisions for taxpayers to reduce their taxable income and thereby reduce the total tax payable. Individuals must file their taxes on time to avoid last minute rush and making hasty investment decisions that will prove to be detrimental to their financial wellbeing.

Being conscientious and filing returns on time will help you plan your taxes and investments better and eventually, empower you to make smarter decisions towards your financial independence.

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