Crossing these bank, cash, or credit card transaction limits may trigger an Income Tax notice. Know the rules to avoid legal trouble.
Anisha Kumari | Jun 7, 2025 |
Income Tax Red Flags: You May get Notice If These Limits Are Crossed
Every year, many people break income tax rules by mistake and end up receiving notices from the Income Tax Department. This mainly happens because they are not aware of the limits set for transactions through bank accounts, cash deposits, fixed deposits, property purchases and credit card payments.
The Income Tax Department keeps a close eye on financial activities. If an individual doesn’t follow the rules properly, mainly for cash transactions, then they could face strict action. These rules are made to catch unusual or large transactions that may not be explained properly.
A person can receive an Income Tax notice if more than Rs. 10 lakh is deposited in a bank account in a financial year. Whether the money is deposited in one account or spread across many, this limit applies to all accounts owned by a person. The department may ask you to provide the source of the deposited money.
Also, when someone deposits more than Rs. 10 lakhs in cash, it can result in red flags. The Income Tax Department may quickly issue a notice in such cases, and the account holder will have to explain where the money came from within the given time.
If you have opened a fixed deposit account in a bank, then you should not cross a certain limit to avoid an income tax notice. You should not deposit more than Rs. 10 lakh in cash in FD accounts. If you cross this limit, then the income tax department may send you a notice. If you are asked about its source, then you will need to answer them within a specified time limit.
People need to be careful while doing property transactions. The Income Tax Department may send a notice if someone purchases a building or house by paying Rs. 30 lakh or more in cash. A person can face trouble if they try to hide this transaction or do not respond properly.
Credit card payments also get monitored. If someone pays Rs. 1 lakh or more in cash while clearing credit card bills, this can also result in receiving a notice. And it doesn’t matter what your payment method is, if credit card payments cross Rs. 10 lakhs in a year, the department can ask about the source of funds.
These rules have been made so that misuse can be stopped and everyone pays their fair share of tax. It is important for people to stay informed and follow the limits, so they don’t end up getting a notice or facing any legal issues.
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