Income Tax Dept Is Tracking These High Value Transactions

(Transaction Limits, Criteria & Notice Risk Explained)

Many taxpayers think that the Income Tax Department only checks what is written in the Income Tax Return. This assumption is incorrect.

In reality, the Income Tax Department tracks specific high value financial transactions automatically, even if you never disclose them in your ITR. These transactions are reported by banks, NBFCs, registrars, mutual funds, stock exchanges, credit card companies, and other institutions under mandatory reporting laws.

If such transactions are not aligned with your declared income, the system flags them and issues notices.

This blog explains exact transaction limits, reporting criteria, legal backing, and notice risk, so that you understand when and why the department becomes alert.

Legal Basis: How Income Tax Gets This Data

High value transactions are reported under:

• Section 285BA of the Income Tax Act
• Statement of Financial Transactions (SFT)
• Rule 114E of Income Tax Rules
• TDS / TCS provisions
• LRS reporting norms (RBI + IT Dept)

All reported data is linked to your PAN and reflected in AIS & TIS.

🔴 MASTER TABLE: High Value Transactions Tracked by Income Tax Dept

Transaction Type	Limit / Criteria	Who Reports	Where It Appears
Cash deposit – Savings A/c	₹10 lakh or more in FY	Bank	AIS
Cash deposit – Current A/c	₹50 lakh or more in FY	Bank	AIS
Cash withdrawal	₹1 crore+ (risk based)	Bank	AIS
Credit card payment (cash)	₹1 lakh+ in FY	Card issuer	AIS
Credit card payment (non-cash)	₹10 lakh+ in FY	Card issuer	AIS
FD investment	₹10 lakh+ in FY	Bank / NBFC	AIS
Mutual fund investment	₹10 lakh+ in FY	AMC	AIS
Share trading (sale)	No minimum (STT based)	Stock Exchange	AIS
Property purchase / sale	₹30 lakh+ or stamp value	Registrar	AIS
Foreign remittance (LRS)	₹7 lakh+ in FY	Bank	AIS
GST turnover mismatch	Any mismatch	GSTN	Internal system

1️⃣ Cash Deposit in Savings Account (₹10 Lakh Rule)

🔹 Reporting Limit

• ₹10 lakh or more cash deposit in a savings account in one financial year

🔹 What the Dept Checks

• Your declared income
• Nature of cash source
• Pattern of deposits (single vs frequent)
• Previous year income trend

🔹 Common Notice Reason

Cash deposited but income shown is low or nil.

🔹 Important

Even if deposits are:

• From savings
• From business cash
• From gifts

Source must be explainable and documented.

2️⃣ Cash Deposit in Current Account (₹50 Lakh Rule)

🔹 Reporting Limit

• ₹50 lakh or more cash deposit in a current account in FY

🔹 Why Risk Is Higher

• Current accounts are linked to business activity
• Turnover expectation is higher
• GST comparison happens automatically

🔹 Notice Trigger

• Cash deposits but:
  • No ITR filed, or
  • Low turnover shown, or
  • GST return mismatch

3️⃣ Credit Card Transactions (Often Ignored, Highly Tracked)

🔹 Reporting Limits

Type	Limit
Cash payment	₹1 lakh+ in FY
Non-cash payment	₹10 lakh+ in FY

🔹 What Income Tax Analyses

• Lifestyle vs income
• Multiple cards usage
• International card spends

🔹 Example

If income declared = ₹4 lakh
Credit card spend = ₹12 lakh

➡️ System flags disproportionate expenditure

4️⃣ Fixed Deposit & Bank Interest Tracking

🔹 FD Investment Limit

• ₹10 lakh+ investment in FDs in FY

🔹 Interest Tracking

• No minimum limit
• Even ₹100 interest appears in AIS

🔹 Common Mistake

“TDS nahi kata, isliye income nahi dikhayi”

❌ Wrong
Interest is taxable whether TDS is deducted or not.

5️⃣ Mutual Fund Investments & Redemptions

🔹 Reporting Threshold

• ₹10 lakh+ investment in FY
• All redemptions reported (no minimum)

🔹 What Dept Expects

• Capital gain calculation
• Correct holding period
• Correct ITR schedule

🔹 Risk Area

• Switching between schemes without reporting gains
• Ignoring small redemptions

6️⃣ Share Trading (Equity, F&O)

🔹 Reporting Rule

• No minimum limit
• All STT-based sale transactions reported

🔹 Important Reality

AIS shows:

• Gross sale value
  NOT
• Profit or loss

🔹 Common Error

Taxpayer sees no profit → does not report transaction
➡️ AIS mismatch notice

7️⃣ Property Purchase / Sale (₹30 Lakh+)

🔹 Reporting Criteria

• Stamp duty value ₹30 lakh or more
• PAN mandatory for buyer & seller

🔹 Major Notice Trigger

• Property sold
• Capital gain not declared

This almost guarantees a notice.

8️⃣ Foreign Remittance (LRS – ₹7 Lakh Rule)

🔹 Reporting Threshold

• ₹7 lakh+ remittance in FY

🔹 Covered Purposes

• Education
• Travel
• Investment
• Gifts
• Medical

🔹 Dept Checks

• Source of funds
• Income adequacy
• TCS compliance

9️⃣ GST Turnover vs ITR Turnover

🔹 System Comparison

GST Return	ITR
GSTR-1 / 3B	Business income

🔹 Risk

• GST turnover high
• ITR income low

➡️ Dual scrutiny: GST + Income Tax

Why Notices Are Issued (Real Reason)

Notices are not issued because transaction is high, but because:

• Income does not justify transaction
• Disclosure missing
• Wrong head of income
• Wrong ITR form
• AIS ignored

The system checks logic, not morality.

How to Stay Safe (Practical Rules)

• Always review AIS before filing ITR
• Match income with spending
• Maintain cash source proof
• Do not ignore small reported income
• Choose correct ITR form
• Declare capital gains properly
• Avoid cash-heavy behaviour without records

Final Truth (No Sugar-Coating)

❌ “Department ko pata nahi chalega” — myth
✅ “Data already system me hai” — reality

High value transactions are normal.
Unexplained high value transactions are dangerous.

Professional Support

If you have high cash deposits, large spends, property transactions, or already received a notice, expert handling matters.

Kyna FinTax Associates
WZ-1390/Z2, 3rd Floor, Nangal Raya Extension
South West Delhi – 110046
📞 +91 74210 82222
📧 services@kynafintax.com
🌐 https://kynafintax.com