Income Tax Dept. Cracks Down on High Earners Hiding Income, Monitors Big Transactions

What New Change has been Adopted?

The Self-Reporting Organizations (SROs), such as banks, post offices, cooperatives, fintech companies, and mutual fund houses, have been instructed by the Central Board of Direct Taxes (CBDT) to reveal complete information on the high-value transactions performed by them during the financial year by May 31, 2025, of the next financial year.

What is Meaning of High-value Transactions?

A person’s account is credited or debited with a large amount by a bank or institution that crosses a certain limit; it needs to be reported to the Income Tax Department. This information is reported to the I-T department under Statement of Financial Transactions (SFT) in Form 61A or as a reportable account in Form 61B. This provides the IT department access to the financial transactions performed by the individual and helps ensure tax compliance.

Which Type of Transaction Needs to be Reported to I-T Department?

1. Cash payments made against bank drafts, pay orders, banker’s checks, or RBI prepaid instruments:

• Limit: Rs 10,00,000
• Reporting: Banks or cooperative societies will report through Form 61A.

2. Cash deposit in a savings bank account

• Limit: Rs 10,00,000
• Reporting: Banks, cooperative societies, and post offices.

3. Cash deposit or withdrawal in the current account

• Limit: Rs 50,00,000
• Reporting: Banks or cooperative societies.

4. Purchase or sale of immovable property

• Limit: Rs 30,00,000
• Reporting: Property Registrar or Sub-Registrar through Form 61A.

5. Cash investment in shares, mutual funds, debentures, or bonds

• Limit: Rs 10,00,000
• Reporting: Related company or mutual fund trustee.
• Note: No reporting if the amount is transferred from one scheme to another.

6. Cash payment of credit card bill

• Limit: Rs 100,000
• Reporting: Banks or cooperative societies.

7. Non-cash payment of the credit card bill

• Limit: Rs 10,00,000
• Reporting: Banks or cooperative societies.

8. Foreign exchange transactions (spending by forex card credit, debit/credit card, or traveller’s check)

• Limit: Rs 10,00,000
• Reporting: Persons authorised under the Foreign Exchange Management Act.

9. Cash deposited in a fixed deposit or a recurring deposit

• Limit: Rs 10,00,000
• Reporting: Banks, cooperative societies, Nidhi companies, and NBFCs.

Steps adopted by the I-T department

Form 26AS Improvement:

• Now, the details of Specified Financial Transactions (SFT) are always visible on Form 26AS. Along with this, the Annual Information Statement (AIS) has also been introduced, which shows the financial information of the taxpayer.

TDS on cash withdrawal:

• If an individual withdraws cash of more than 1 crore, then 2% of the TDS will be reduced. Individuals who are not filing for the previous three years, then 2% of the TDS will be reduced on withdrawals of more than Rs. 20 lakhs, and 5% of the TDS will be reduced on withdrawals of more than Rs. 1 crore.

ITR filing is compulsory:

• If an individual earns income of more than Rs. 250,000, then it is compulsory for him/her to file an ITR. However, from April 2019, it has been made compulsory to file an ITR even if you earn a lower income if you have made some high-value transactions like depositing an amount of more than 1 crore in a current account of a bank or cooperative bank, if you have spent more than Rs. 2 lakh on foreign travel, or if you have paid an electricity bill of more than Rs. 1 lakh.