Getting an unexpected SMS or email from the income tax department about high value transactions can feel alarming. But here's the thing — it doesn't always mean you've done something wrong. Sometimes it's a mismatch in the AIS. Sometimes it's a transaction your bank reported that you simply forgot to disclose. The income tax department has built a structured system for flagging significant cash and financial transactions, and understanding how it works can save you a lot of stress. This guide covers everything — what triggers a notice, which transactions get reported, and exactly how to respond online.
Banks, registrars, mutual fund houses, and several other institutions are legally required to report financial transactions above certain thresholds directly to the income tax department. These are called Specified Financial Transactions (SFT) — and they show up in both Form 26AS and the Annual Information Statement (AIS).
The reporting happens through Form 61A or Form 61B, submitted by specific entities no later than 31st May of the following financial year.
And honestly, most people don't realise how wide this reporting net is. It's not just cash. It covers property purchases, foreign exchange, credit card payments, and more.
Here's the full list of transactions the income tax department closely monitors. If yours crosses any of these thresholds, expect it to appear in your AIS.
Sr. No.
Transaction
Threshold
Reporting Authority
1
Cash payment for bank draft, pay order, banker's cheque or prepaid RBI instruments
₹10 lakhs
Banks / Co-operative societies
2
Cash deposits in a savings bank account
Banks / Co-operative societies / Post Master General
3
Cash deposit or withdrawal from a current account
₹50 lakhs
4
Sale or purchase of immovable property
₹30 lakhs
Property Registrar / Sub-registrar (via Form 61A)
5
Investment in shares, mutual funds, debentures and bonds in cash (transfers between schemes not included)
Company issuing Shares / Mutual Fund Trustee
6
Buyback of shares from any person (other than open market purchases)
Listed Company
7
Credit card bill payment in cash
₹1 lakh
8
Credit card bill payment other than cash
9
Sale of foreign currency / FOREX card credit / spending in foreign currency via debit card, credit card, traveler's cheque
Authorised Person under FEMA, 1999
10
Cash deposits in fixed deposit or recurring deposit account
Banks / Co-operative societies / Nidhi Company / NBFC
11
Cash received for sale of any goods or services (other than Sr. No. 1-10)
₹2 lakhs
Any person liable for audit under Section 44AB
Most people focus only on savings account deposits. But property deals, FD deposits, and even foreign travel spending can put you on the department's radar.
The income tax department sends emails and SMS alerts to identified taxpayers under its e-campaign initiative. This happens when the department collects information about your financial transactions from third-party sources — SFT data, TDS, TCS, and more — and notices a gap or potential mismatch.
You might receive one if:
Don't ignore these communications. Responding — even to say the information isn't correct — is always better than silence.
What to Do When Form 26AS Shows SFT Transactions
So you've logged into Form 26AS and spotted SFT transactions. What now?
Got an email or SMS about high value transactions or non-filing of your ITR? Here's exactly how to respond through the income tax compliance portal — step by step.
Step 1: Log in to your income tax e-filing account at the income tax gov e-filing portal.
Step 2: On the home page, go to 'Pending Actions' → Compliance Portal → 'e-Campaign'.
Step 3: Select the relevant e-campaign from the list.
Step 4: After being redirected, the e-campaign landing page opens. Select the relevant campaign and click 'Provide feedback in AIS'.
Step 5: If there are no active e-campaigns linked to your account, you'll see the message — "No Compliance Record has been generated for you."
Step 6: Select the Information Category. Transactions marked with 'e' are the ones you've been contacted about.
Step 7: Select the specific transaction — ones marked as 'Expected' need your feedback.
Step 8: Submit your response by choosing the most appropriate option:
Under the Preliminary Response section, you'll answer questions based on the type of e-campaign — whether it's about non-filing of ITR or high value transactions.
For a non-filing campaign, the key question is: "Whether Income Tax Return (ITR) has been filed?"
After filling everything in, submit the response. You can download a copy from the 'Activity History' screen.
Under the e-campaign, you're also required to provide feedback on specific information items marked as 'Expected' in your AIS — especially where no feedback has been given yet.
This is the L1 level information. Once you submit feedback here, your response is recorded and the income tax department is notified. It's your opportunity to either confirm the transaction or flag an error.
The department upgraded Form 26AS to include Specified Financial Transactions (SFT). It also introduced the Annual Information Statement (AIS), which shows all your financial activity in one place — from property deals to dividend income to mutual fund redemptions.
Registrars, banks, post offices, stock exchanges — all of these specified institutions must report transactions exceeding prescribed thresholds. Once reported, everything flows into your AIS portal so you can voluntarily disclose it in your ITR.
To trace large cash movements, the government introduced TDS rules for cash withdrawals:
So even withdrawing large amounts from your own account can attract TDS if your filing history isn't clean.
Here's something a lot of people genuinely miss. Even if your total income is below ₹2.5 lakhs, filing an ITR becomes mandatory if you've done any of the following:
So "my income is low" isn't a valid reason to skip filing if any of these thresholds apply. The high value transactions income tax rules don't care about your income level alone — they care about your financial activity.
The department tracks them through the Annual Information Return (AIR), Statement of Financial Transactions (SFT), TDS and TCS deductions, and ITR filings. Banks, registrars, mutual fund houses, and other specified entities report your transactions automatically. This data gets loaded into AIS and Form 26AS, which the income tax department cross-references with your ITR.
The e-campaign helps taxpayers voluntarily validate their financial transactions. When the income tax department sees a mismatch between what's reported by institutions and what's in your ITR — or if no ITR is filed at all — it sends an email or SMS nudging you to explain or correct the gap through the income tax compliance portal.
Part E of Form 26AS contains all the details of your high value transactions as reported by banks, registrars, mutual funds, and other specified entities. It's the section most relevant to SFT transactions and the one you should check first when you receive any income tax notice for cash deposit or investment activity.
Yes. Under Section 271FA, failure to report high value transactions attracts a penalty of ₹500 per day after May 31st. Once a notice is received from the income tax department, the penalty increases to ₹1,000 per day after the deadline expires. These aren't small amounts — they add up fast if you sit on a notice.
The Income Tax Act doesn't set a limit on online transactions specifically. But if the total amount exceeds the SFT threshold for that category — such as ₹10 lakhs for credit card payments other than cash — it gets reported as a high value transaction and shows up in your AIS.
Log back into the income tax compliance portal and check the status of your submission. You can also track updates in the 'Activity History' section. Keep records of everything — your submission, the acknowledgement, and any further correspondence from the income tax department. This documentation protects you if questions arise later.
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