The Income Tax Department in India is cracking down on big spenders who might be underreporting their income. They’re doing this by keeping a close eye on high-value financial transactions, and they’ve roped in banks, post offices, and even fintech companies to help. These institutions now have to report certain activities to ensure everyone pays their fair share of taxes.
What’s Being Watched?
The IT Department is leveraging enhanced data analytics and working closely with financial institutions to spot those spending big but declaring little. Here’s a breakdown of the types of transactions and their thresholds that are now under scrutiny:
| Transaction Type | Threshold | Reporting Entity |
|---|---|---|
| Cash payments for drafts or RBI instruments | ₹10,00,000+ | Banks, Co-ops (Form 61A) |
| Savings account cash deposits | ₹10,00,000+ | Banks, Co-ops, Post Offices |
| Current account deposits/withdrawals | ₹50,00,000+ | Banks, Co-ops |
| Sale/Purchase of property | ₹30,00,000+ | Sub-Registrar (Form 61A) |
| Investment in shares, MFs, bonds (cash) | ₹10,00,000+ | Companies, MF Trustees |
| Credit card bill (cash payment) | ₹1,00,000+ | Banks, Co-ops |
| Credit card bill (non-cash payment) | ₹10,00,000+ | Banks, Co-ops |
| Foreign exchange transactions | ₹10,00,000+ | Authorised Dealers (FEMA) |
| Fixed/recurring deposit in cash | ₹10,00,000+ | Banks, NBFCs, Co-ops, Nidhi Cos. |
Export to Sheets
These financial entities must submit the details of these transactions annually under the Statement of Financial Transactions (SFT) by May 31st.
Enhanced Compliance Measures
The IT Department isn’t just watching; they’re making it easier for you to see what they see and harder to avoid your tax obligations:
- Form 26AS & AIS: Your Form 26AS and Annual Information Statement (AIS) now include these high-value financial activities reported under SFT. This means you can easily review all your major transactions, ensuring transparency and making it simpler to file accurate returns. You can also provide feedback on any discrepancies in your AIS.
- TDS on Large Cash Withdrawals: To discourage large cash transactions, there’s now TDS (Tax Deducted at Source) on significant cash withdrawals:
- 2% TDS on cash withdrawals exceeding ₹1 crore in a financial year.
- For habitual non-filers (those who haven’t filed ITR for the last three assessment years):
- 2% TDS on withdrawals between ₹20 lakh and ₹1 crore.
- 5% TDS on withdrawals exceeding ₹1 crore.
When is ITR Filing Compulsory?
Beyond the standard income threshold of ₹2,50,000, you must file an Income Tax Return (ITR) even if your income is low, if you engage in any of these specific high-value transactions:
- Depositing over ₹1 crore in a current account.
- Spending more than ₹2 lakh on foreign travel.
- Paying in excess of ₹1 lakh towards electricity bills.
The bottom line is clear: if you’re spending big, the Income Tax Department expects you to declare your income fairly. It’s always a good idea to keep accurate records of all your significant transactions and cross-check them with your AIS to avoid any future hassles.
Do you have any questions about these new regulations or how they might affect you?