UPI Payment- Major news for UPI users. Nowadays, digital payment has become a part of our everyday life. Rs 100 to the tea vendor, Rs 200 to the vegetable vendor or Rs 500 in exchange for some household service, these transactions are now common. People wonder why anyone would notice such a small amount. But if such transactions keep happening every day, then the picture may change by the end of the year.
Imagine, if you send Rs 400 every day to someone through Paytm or Google Pay, then it will become Rs 12,000 in a month. In a year, this figure goes above Rs 1 lakh. Now if this money is being given or taken in exchange for some service or work, then it can be considered as income and in such a case it is necessary to mention it in ITR.
The Income Tax Department keeps an eye not only on large transactions but also on the pattern of transactions. If a person repeatedly sends or receives a fixed amount in different or the same account, it may be an indication that some income or service related activity is going on. In such a case, the department can check where the money is coming from and for what purpose.
Data from banks and UPI apps can reach the Income Tax Department through the National Payments Corporation of India (NPCI) and banks. This data helps in knowing what kind of transactions are happening in which accounts. So a daily payment of Rs 100-Rs 200, even if small, but if it is happening regularly, then it can come under the radar of tax officials.
Do only transactions form the basis of tax?
Just making a payment does not make you liable for tax. If your total income is below the tax limit, then there is no need to worry about such transactions, especially when they are being made as an expense, such as grocery, milk, vegetables or household items. But if you are receiving payment for a service from someone, such as tuition, freelance project or running a small business, then such digital payments must be considered as income and disclosed.
Many people teach tuition or do freelance designing on a small scale and get paid through Google Pay or Paytm in return. If this income is added to your total income and exceeds the tax limit, then it becomes mandatory to include it in ITR.
The Digital India initiative has provided facilities, but it has also increased accountability. Now the Income Tax Department not only looks at transactions worth crores, but also looks at how many times, from where and through which medium the money is coming. This makes it clear that the tax system has now become more granular and data-driven. If you are making or receiving payment through digital means, it would be better to provide complete information while filing ITR. By disclosing income honestly, there is no possibility of notice or penalty in the future.