High-value transaction not disclosed? Tax officials may still spot it

Cash deposits, property deals and investments above set limits are automatically reported to the Income Tax Department under SFT rules

Some taxpayers assume that non-disclosure in an Income Tax Return (ITR) allows transactions to go unnoticed, but this is no longer the case. High-value activities — including cash deposits, property purchases and mutual fund investments — are now automatically reported to the Income Tax Department via the Statement of Financial Transaction (SFT).

 

Money trail

 

SFT is a mandatory reporting framework under which banks, financial institutions, companies and registrars submit details of specified high-value transactions by individuals in a financial year.

 

These organisations must file reports electronically with the Income Tax Department, typically by May 31 after a financial year ends. Certain market-related transactions, such as those involving listed securities or mutual funds, are reported more frequently.

 

 

The objective is to identify income mismatches, undisclosed investments and suspicious cash usage.

 

Several routine financial activities trigger reporting once they cross prescribed limits. Key examples include:

 

Banking and cash transactions

 

• Cash deposits of Rs 10 lakh or more in savings accounts in a financial year
• Cash deposits or withdrawals of Rs 50 lakh or more in current accounts
• Cash payments above Rs 10 lakh for bank drafts, payment orders or prepaid instruments

 

Credit card spending

 

• Cash payments of Rs 1 lakh or more as annual credit card bills
• Total credit card payments exceeding Rs 10 lakh in a year through any mode

 

Investments and financial assets

 

• Fixed or term deposits exceeding Rs 10 lakh (excluding renewals)
• Investments of Rs 10 lakh or more in:

 

Mutual funds

 

Shares

 

Bonds or debentures

 

Share buybacks worth over Rs 10 lakh

 

Property and large purchases

 

Purchase or sale of immovable property valued at Rs 30 lakh or more

 

Cash payments exceeding Rs 2 lakh for goods or services

 

Foreign exchange transactions

 

Forex purchases or foreign currency expenses above Rs 10 lakh annually

 

Why taxpayers should pay attention

 

• Transactions across multiple accounts are aggregated.
• Joint accounts are reported against all holders.
• Deposits and withdrawals are evaluated separately.

 

If reported transactions do not align with declared income, taxpayers may receive notices seeking clarification.

 

What this means for taxpayers

 

The SFT framework significantly reduces the scope for keeping large financial dealings outside the tax net. Experts advise ensuring that major deposits, investments or spending patterns are consistent with declared income sources.

 

Transparency in reporting income matters more than ever, as high-value transactions are already visible to tax authorities, whether disclosed or not.