The Income Tax Department is tightening its grip on big spenders who underreport income by closely tracking high-value financial transactions. Institutions like banks, post offices, and fintechs must now report such activities to ensure better tax compliance.
The Income Tax Department has launched a stricter compliance campaign to identify individuals spending large sums but hiding their actual income. Through enhanced data analytics and tighter coordination with financial institutions, the department now closely monitors high-value transactions to curb tax evasion.The Income Tax Department has launched a stricter compliance campaign to identify individuals spending large sums but hiding their actual income. Through enhanced data analytics and tighter coordination with financial institutions, the department now closely monitors high-value transactions to curb tax evasion.
Partnering with banks, post offices, co-operatives, fintechs, and mutual funds, the department collects transaction data using automated systems and financial intelligence tools. These entities are mandated to submit details of big-ticket financial activities annually under the Statement of Financial Transactions (SFT) by May 31.
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Large deposits, property deals, investments, and even high credit card payments are under scrutiny. Any such transaction exceeding the defined threshold must be reported to the tax department.
Transaction Type Threshold Reporting EntityCash 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 OfficesCurrent account deposits/withdrawals ₹50,00,000+ Banks, Co-opsSale/Purchase of property ₹30,00,000+ Sub-Registrar (Form 61A)Investment in shares, MFs, bonds (cash) ₹10,00,000+ Companies, MF TrusteesCredit card bill (cash payment) ₹1,00,000+ Banks, Co-opsCredit card bill (non-cash payment) ₹10,00,000+ Banks, Co-opsForeign exchange transactions ₹10,00,000+ Authorised Dealers (FEMA)Fixed/recurring deposit in cash ₹10,00,000+ Banks, NBFCs, Co-ops, Nidhi Cos.Compliance Enhancements
Form 26AS & AIS: Now include financial activity under SFT, accessible by taxpayers for review.
TDS on Large Cash Withdrawals: 2% on Rs 1 crore+, 5% if non-filer and over Rs 1 crore; 2% on Rs 20 lakh+ for habitual non-filers.
AdvertisementITR Filing Triggers: Even if income is below Rs 2.5 lakh, ITR is mandatory if you deposit Rs 1 crore in current accounts, spend Rs 2 lakh+ abroad, or pay Rs 1 lakh+ in power bills.
The department aims to ensure every high-spending individual also fairly declares income.
ITR filing
Filing income tax returns (ITR) is compulsory for individuals with an income exceeding Rs 2,50,000. Furthermore, starting from April 2019, individuals need to file returns even if their income is low, provided there are specific high-value transactions. These transactions include depositing over Rs 1 crore in a current account, spending more than Rs 2 lakh on foreign travel, or paying in excess of Rs 1 lakh towards electricity bills.
