The government depends heavily on income tax collections to fund its operations. Naturally, it wants more and more people to file their taxes, and to do so accurately.
One way it ensures this is by keeping an eye on certain financial transactions. Banks, registrars, mutual fund companies, and even travel agents must report specific transactions to the government once they exceed a prescribed limit. These are known as high-value transactions, think big-ticket spends like buying a house, making large credit card payments, or flying off on that dream overseas holiday.
Once reported, the government may expect you to declare them in your Income Tax Return (ITR) or explain the source of the funds.
What qualifies as high-value transaction?
Here are some common examples along with their reporting limits:
| Transaction type | Threshold amount |
|---|---|
| Cash deposits in a savings account, FD/RD | â‚ą10 lakh |
| Cash deposits/withdrawals from a current account | â‚ą50 lakh |
| Sale or purchase of property | â‚ą30 lakh |
| Credit card bill payment | â‚ą10 lakh |
| Cash investments in shares, mutual funds, debentures, or bonds | â‚ą10 lakh |
| Foreign currency transactions (sale, FOREX card load, or spending) | â‚ą10 lakh |
| Purchase of jewellery, art, luxury goods, marble, etc. | â‚ą1 lakh |
| Annual electricity bill | â‚ą1 lakh |
| Life insurance premium | â‚ą50,000 |
| Health insurance premium | â‚ą20,000 |
How does the ITD track your transactions?
With Aadhaar and PAN now linked, all your financial information is connected, giving the government a clear, unified view of your money activities. It works through a network of reporting systems.
So, if you make a high-value transaction, the entity involved will report it to the Income Tax Department (ITD) by filing a Specified Financial Transaction (SFT) report using Form 61A or 61B.
This information is then added to your Annual Information Statement (AIS) and Form 26AS. The ITD reviews these records and compares them with your Income Tax Return (ITR) to spot any gaps or mismatches.
What happens if you don’t report high-value transactions in your ITR?
If you miss reporting them, the ITD will send you a notice through its e-Campaign system. This can happen in two situations:
1. You didn’t file your ITR: If you made a high-value transaction but skipped filing your return, you’ll get an email or SMS from the ITD asking you to confirm your income and explain the transaction.
2. There’s a mismatch in your ITR: If the details in your return don’t match what’s recorded in your AIS or Form 26AS, the ITD will send you a mismatch notice. For instance, if your AIS shows interest income from a fixed deposit but your return leaves it out or reports a different figure, you’ll be asked to clarify.
How to respond to e-campaign notices?
- Log in to the income tax e-filling portal
- Go to Pending Actions > Compliance Portal
- You will be redirected to the AIS/compliance portal
- Click on e-Campaign
- Select the relevant e-campaign from the list
- You’ll need to respond under two sections: Preliminary Response & Feedback on Information on AIS
What is preliminary response?
Under this section, you have to respond to a set of questions, which depend on the type of campaign you’ve received, whether it is non-filing of return or about certain high-value transactions made by you.
After filling in all the fields, submit the response.
What is Feedback on information on AIS?
In this section, you are expected to provide feedback on certain transactions flagged by the ITD, and you can choose to agree or disagree with the information.
- Once you click on “Provide feedback in AIS” button, you will see financial transactions under different categories. You need to look for marked as expected (“e” mark) next to the relevant information category.
- After clicking on the relevant information category card, tap on the “Expected” button under Feedback column.
- Submit the response from the available options:
- Information is correct
- Information is partially correct
- Information relates to another PAN/year
- Information is duplicate/included in other information
- Information is denied
- Click on “Submit”
By following these steps, you can respond to the ITD’s e-Campaign notice for high-value transactions or non-filing of returns. Once you reply, the ITD will review your explanation and share any further updates, so keep checking your email and SMS regularly.
And if you realise you left out any details in your ITR, you can always file a revised return to correct it.