Most People Don’t Know This — But the Tax Department Might Be Tracking Your Spending
If you've made a big financial move recently — like deposited a large amount of cash, swiped your credit card for high-value purchases, or invested a lump sum in mutual funds — there's a good chance that your transaction has been reported to the Income Tax Department.
This happens through a system called Statement of Financial Transactions (SFT). These details then show up in your Annual Information Statement (AIS) — a report card of your financial behavior.
Here’s the catch:
Most people don’t even know this exists.
In this blog, we’ll break it all down in simple terms:
- What high value transactions really are
- Why AIS and SFT matter for every taxpayer
- Which financial activities are reported to the tax department
- How you can avoid unwanted tax notices
What is AIS and Why Should You Check It?
The Annual Information Statement (AIS) is a detailed summary of your financial transactions — available on the Income Tax Portal. It includes:
- Your income from salary, interest, rent, dividends, etc.
- Your investment activities
- And most importantly — your high value financial transactions
This data is collected through SFT filings, which are submitted by banks, mutual funds, property registrars, and other institutions when your transaction crosses certain limits.
Think of AIS as your financial “mirror” in the eyes of the tax department. If your ITR doesn't match what's reflected in your AIS, you could get a notice or end up under scrutiny.
What Are High Value Transactions?
High value transactions are large financial activities that cross pre-set thresholds. These transactions must be reported to the Income Tax Department by the institution where you made them.
Here are a few examples of when SFT reporting is triggered:
- Depositing over ₹10 lakh in cash in a savings account
- Paying more than ₹1 lakh in credit card bill via cash, or ₹10 lakh through any mode
- Buying or selling property worth ₹30 lakh or more
- Making fixed deposits above ₹10 lakh
These transactions are automatically reported to the department, and appear in your AIS.
List of High Value Transactions Reported to the Income Tax Department
Here’s a helpful table to understand what qualifies as a high value transaction in India:
| Transaction Type | Threshold Value | Who Reports It |
|---|---|---|
| Cash deposit in Savings Account | ₹10 lakh or more in a year | Banks / Post Offices |
| Cash deposit/withdrawal in Current Account | ₹50 lakh or more | Banks / Post Offices |
| Credit Card Bill Payment | ₹1 lakh in cash OR ₹10 lakh in any mode | Banks / Card Issuers |
| Purchase of Mutual Funds, Bonds, Shares | ₹10 lakh or more | Mutual Funds / Companies |
| Property Purchase/Sale | ₹30 lakh or more | Registrar / Sub-registrar |
| Foreign Exchange Purchase | ₹10 lakh or more | Authorized Dealers |
| Time Deposits (FDs, RDs) | ₹10 lakh or more | Banks / Post Offices |
| Bank Drafts, Pay Orders, Prepaid Instruments | ₹10 lakh or more | Banks |
| Buyback of Shares | ₹10 lakh or more | Listed Companies |
| Donations to Trusts | ₹10,000 or more | Trusts |
Important: These limits are cumulative for the financial year — not just one-time.
Why This Matters — Even If You’re a Salaried Individual or Small Investor
Many people believe that only businesses or HNIs need to worry about this.
But the truth is, even regular taxpayers might unknowingly trigger reporting:
- Transferring family savings into your account
- Paying for a destination wedding using your credit card
- Buying a flat or investing in bonds
If your tax return doesn’t reflect where the money came from, you could receive a compliance notice from the department.
What Should You Do to Stay Compliant?
Here’s a simple checklist to keep yourself safe and stress-free during tax season:
- Download your AIS from the Income Tax portal.
- Cross-check it with your Form 26AS and ITR.
- Disclose all income — including gifts, capital gains, interest, and bonus credits.
- Keep documentation ready to explain the source of large inflows.
- Avoid large cash transactions — they’re harder to explain and more likely to be flagged.
Conclusion: Stay Aware, Stay Prepared
In 2025, the Income Tax Department is smarter, more digital, and more interconnected than ever. Tools like AIS and SFT reporting are designed to plug tax leakage and ensure transparency.
The best way to protect yourself?
Stay aware of what’s being reported, maintain clean financial records, and always file a truthful, accurate tax return.
If you're unsure about how to interpret your AIS or whether any transaction might raise questions, seek advice from a tax professional before it’s too late.