ITR filing is mandatory if your income exceeds a certain limit. However even if your income is less than that limit, you still come under few financial transactions of IT Dept's radar. Know these transaction limits you should not cross.
Vanshika verma | Aug 7, 2025 |
Transaction Limits You Shouldn’t Cross to Stay Off Income Tax Dept.’s Radar
Income tax return filing is mandatory if your income exceeds Rs. 4 lakhs. However even if your income is less than the limit, you still come under few financial transactions of Income Tax Department’s radar.
It is important to have knowledge of specific financial limits to avoid any investigation from the tax authorities, because any irregularities on certain expenses or investments could lead to notice from the IT Department.
There is no alert that can tell you when a financial transaction could bring your Income Tax Return (ITR) under the radar of the Income Tax Department. But if you’re not careful, a routine bank transaction or a credit card payment might quietly set off a red flag.
If your total cash deposits in all the saving bank accounts cross Rs 10 lakh in a financial year, banks are required to report to the Income Tax Department. The limit applies to the total cash deposited, not just in one bank, but all accounts that are held in your name.
These high limits are permitted for businesses and professionals using current accounts, but the investigation could still happen if such transactions happen without corresponding business income or invoices.
Paying more than Rs 1 lakh in cash against your credit card dues in a year will likely be reported. Even though you are clearing due via online or banking channels, and if your total annual credit card payments cross Rs 10 lakh is identified too under SFT.
FDs worth Rs 10 lakh or more made in a year are automatically reported by banks. This is not about the investment you made but to check whether the money used matches your disclosed earnings. If your earnings do not match, you are required to provide documentation.
Any property deal amount at Rs 30 lakh or more is reported to the tax authority. and it is not about the sale value but if the stamp value of the property is more than it should be considered.
If you have traveled abroad or you have spent more than Rs 10 lakh on foreign travel 0r bought foreign exchange. The tax authority will investigate this too. These types of transactions are identified under the Liberalized Remittance Scheme (LRS), and banks report them immediately.
If you are putting more than Rs 10 lakh into mutual funds, equities, or other securities with any single financial institution in a year, that data gets also reported. (Mainly for people who invest in SIPs or lump sums but have not updated their income declaration or filed their returns correctly.
If you receive more than Rs 50,000 in cash from a non-relative it becomes taxable except transaction fall under specific exemption such as marriage. If you receive these types of gifts and does not report it than, it can cause huge trouble later, especially if the sender’s and the receiver’s transactions are not matching.
Under section 269ST of the Income tax Act, 1961, accepting Rs 2 lakh or more in cash from any one person on a single day is not allowed, no matter if it is a personal loan, a sale, or even a gift. By accepting these above-mentioned may lead to a high penalty, irrespective whether it is mentioned in your ITR or not.
Taxpayers can review AIS before filing returns, since most mismatched data show up there and avoid unnecessary cash transactions, especially if there is a digital trail option. They should also maintain proper documents such as receipts, agreements, sources of funds for big expense and should not ignore tax notices and respond promptly with supporting evidence if needed.
In earlier times, many of such threshold limits flew under the radar, especially if the income declared seemed “reasonable” on paper. But with Annual Information Statement (AIS) and SFT reporting becoming stronger, most of the high–value transactions are now traceable. Many agents such as Bank, mutual funds, property registrars and more feed this data into the tax system.
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