The Income Tax (I-T) Department monitors certain high-value transactions, such as those related to your savings bank account deposits, fixed deposits (FDs), mutual fund investments, property dealings, and trading shares in the stock market. Any failure to disclose such transactions while filing your income tax return (ITR) could lead to ITR rejection or attract notices from the I-T department. However, there is no reason to panic if you have failed to mention them in your ITR. You can simply provide the supporting documents for the transactions in a particular financial year, such as bank statements, investment statements, inheritance documents, etc.

Suppose you still have doubts or are unsure about reporting the fund’s provenance, consult a tax consultant. It is vital to be transparent in all your financial transactions and adhere to the law to avoid legal actions.

Also Read: Employees Provident Fund: When Can You Withdraw Funds From Your EPF Account?
Here are a few high-value transactions that could attract I-T notices:

Bank Account Transactions

The income tax rules require you to disclose transactions in your savings bank account exceeding Rs 10 lakh or dealings of Rs 50 lakh and above in your current bank account in a financial year. Also, you will need to report transactions of more than Rs 2 lakh in a single transaction.

Fixed Deposits

As fixed deposit rates have increased, these fixed-income instruments have become attractive nowadays as more and more people invest in them. However, any deposit exceeding Rs 10 lakh in an FD instrument requires you to report the transaction to the I-T department.

Exceeding the Rs 10 lakh threshold for FDs does not necessarily indicate tax evasion, but it will prompt I-T scrutiny and require a clear explanation of the fund’s source. This rule applies to all accounts and financial institutions. Banks must also disclose these transactions if the amount exceeds the specified limit by filing a Form 61A.

Cash Payments

Additionally, banks and cooperative societies are required to report transactions involving cash payments for purchasing bank drafts, pay orders, or banker’s cheques.

Also Read: ITR Filing: How Can You Save Capital Gain Tax On Your Equity Investments?

Credit Card Payments

The income tax department monitors cash payments exceeding Rs 1 lakh annually for credit card bills and non-cash transactions above Rs 10 lakh across all credit cards. Examples of high-value credit card expenses include business-class air travel, tuition fees, donations, and purchase of jewellery items, paintings, marble, electricity bills above Rs 1 lakh, etc., in a fiscal year. In such cases, the I-T department could send notices to the taxpayer to obtain the relevant details.

Real Estate

The I-T rules mandate that property buyers disclose the fund’s source if it involves more than Rs 30 lakh in a real estate deal. It is aimed at combating tax evasion and money laundering. The current threshold for such transactions in an urban area is Rs 50 lakh and Rs 20 lakh in a rural area. The taxpayer can declare it in the registration documents or by submitting Form 26QB to the I-T department. The department may also request information if there are inconsistencies in income or financial activities. A failure to disclose the fund’s source may result in penalties, tax assessment, and potential investigation.