Income Tax High-Value Transactions: Submit Response Under e-Campaign in Compliance Portal

What are High-Value Transactions?

High-value transaction is any financial activity that involve large sums of money and are reported to tax authorities by banks and other institutions when they surpass predefined thresholds, ensuring transparency and regulatory compliance within the financial system. When you exceed these limits, the transaction gets flagged, and you must report it or explain the source of the funds. It is important to know that both NRI and residents are required to report these transactions.

The Income Tax Department keeps a track of the high-value transactions using the SFT (statement of financial transaction) in Form 61A or a reportable account in Form 61B, which is submitted by specific entities. These entities are required to provide information about high-value transactions that they have registered, maintained, or recorded during the fiscal year by May 31st. This helps the Income Tax Department track an individual’s financial activities and ensure tax compliance.

Here are some examples of Income Tax high-value transactions:

Below is a list of transactions that are reported to the Income Tax Department by various agencies such as banks, government agencies, mutual fund houses, and companies by filing Form 61A, also known as Statement of Financial Transactions (SFT).

As per the Income Tax department, the following will be considered high-value transactions if they exceed the following limits:

Cash payment for purchasing bank draft, pay order, banker’s cheque, or prepaid RBI instruments

• Threshold: ₹10,00,000
• Reporting Authority: Banks or co-operative societies (to Director of Income Tax via Form 61A).

Cash deposits in a savings bank account

• Threshold: ₹10,00,000
• Reporting Authority:
  • Banks
  • Co-operative societies
  • Postmaster General.

Cash deposit or withdrawal from a current account

• Threshold: ₹50,00,000
• Reporting Authority: Banks or co-operative societies.

Sale or purchase of an immovable property

• Threshold: ₹30,00,000
• Reporting Authority: Property Registrar/Sub-registrar (via Form 61A).

Investments in shares, mutual funds, debentures, and bonds (in cash)

• Threshold: ₹10,00,000
• Reporting Authority:
  • Company issuing shares, debentures, or bonds
  • Mutual Fund Trustee.

Payment of credit card bill in cash

• Threshold: ₹1,00,000
• Reporting Authority: Banks or co-operative societies.

Payment of credit card bill other than through cash

• Threshold: ₹10,00,000
• Reporting Authority: Banks or co-operative societies.

Sale of foreign currency, crediting FOREX card, or spending in foreign currency

• Threshold: ₹10,00,000
• Reporting Authority: Authorised Person under the Foreign Exchange Management Act, 1999.

Cash deposits in fixed deposit or recurring deposit account

• Threshold: ₹10,00,000
• Reporting Authority:
  • Banks
  • Co-operative societies
  • Nidhi Companies
  • NBFCs.

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How Does the Income Tax Department Track High-Value Transactions?

Have you ever wondered how the tax department keeps track of your high-value transactions? Well, they have access to your financial data they collect from different Government Agencies and banks. Here are a few ways they can monitor your transactions and detect any tax evasion or avoidance.

• Upgraded Form 26AS: The Income Tax Department has upgraded Form 26AS to reflect Specified Financial Transactions (SFT). It has also introduced AIS (Annual Information Statement), where you can view all the financial information. Specified institutions such as banks, post offices, stock exchanges, registrar, etc, have to report transactions exceeding the specified threshold to the Income Tax Department. These transactions are reflected in the AIS portal, so that the taxpayer can report all the information voluntarily based on the AIS information.
• Applicability of TDS on Cash Withdrawal: The banks are required to deduct TDS at 2% on cash withdrawals exceeding Rs.1 crore during the Financial Year. If the person does not file ITR for the last 3 years, then, TDS must be deducted at 2% on cash withdrawals exceeding Rs. 20 lakhs, and for cash withdrawals exceeding Rs. 1 crore, TDS is deducted at 5%.
• Mandatory Filing of Returns: The government has made it mandatory to file ITR in cases where specified transactions have taken place. This applies even if the annual income is less than Rs. 2.5 lakhs (under old regime) and Rs.4 lakhs (under new regime). For example, foreign travel expenditure more than Rs. 2 lakhs, or an electricity bill exceeding Rs. 1 lakh during the year.

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How do Credit Card Transactions Affect your Taxes?

There are no specific rules for credit card spending, but banks are required to report high-value transactions to the Income Tax Department. Financial institutions are required to report any transaction above Rs 10 lakh using Form 61A.

When filing your ITR, make sure you accurately report all of your credit card expenses. If you don't, you could encounter penalties and legal consequences, especially if:

• Your credit card payments surpass ₹1 lakh in cash. In case of credit card payments made through any mode other than cash, the threshold is Rs.10 lakhs.
• You buy goods or services worth ₹10 lakh or more.

To avoid getting a notice for income tax, follow the following steps:

• Even though credit cards allow you to spend more, make sure not to go over the top and thus get a tax notice.
• Filing your taxes on time is important.
• Accuracy will be achieved as ITR revenue will be linked with the Form 26AS; credit card purchases under ₹2 lakh shall be restricted for the fiscal year.
• Declare all the big transactions in your ITR.

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Penalties for High Value Cash Transactions

The Income Tax Department has recently released a brochure emphasising the importance of avoiding cash transactions to mitigate tax penalties. This initiative aims to educate taxpayers about the potential financial repercussions of cash dealings, which can lead to severe penalties under the Income Tax Act.

• Loans & Deposits (Section 269SS):
  If you are accepting cash ₹20,000 or more for loans, deposits, or advances, you might attract a penalty.
• Receiving Cash Above ₹2 Lakh (Section 269ST):
  Whether it's one big payment in a single day, multiple linked transactions, or fees and donations—cross ₹2 lakh, and you face a penalty equal to the cash received.
• Repayments in Cash (Section 269T):
  Loans or deposits exceeding ₹20,000, including interest, cannot be repaid in cash.
• Business Expenses (Section 40A(3)):
  Cash payments above ₹10,000 (₹35,000 for transporters) aren’t allowed as business expense deductions.
• Donations (Section 80G):
  If you’re donating, make sure it’s not over ₹2,000 in cash—no tax benefits apply otherwise!
• Penalty: Any violation of the above rules can lead to a penalty of upto 100% of the transaction amount.

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How Can You Submit Responses in the Compliance Portal?

If you have received an email or SMS for high-value transactions or non-filing of returns, you can respond to the income tax department by following the steps below. The user-friendly platform is designed to make your life easier by allowing you to provide high-value transaction notice reply without ever having to step foot in the Income Tax Department's office. But how exactly do you use the portal to submit high-value transactions notice reply? Here's a step-by-step guide:

Step 1: Income Tax E-filing Portal Login

Taxpayers can log in to the Income Tax E-filing portal using their PAN number and password. If the taxpayer does not have a password, they can generate it by clicking on the 'forgot password' option.

Step 2: View the High-Value Transaction

After logging in, taxpayers can view the high-value transaction reported by the Income Tax Department by clicking on Pending actions > Compliance portal > E Campaign.

Step 3: Select the relevant e-campaign

After reaching the landing page of the e-campaign portal, you can select the relevant e-campaign and click on ‘Provide feedback in AIS.’ If you don’t have active e-campaigns or e-verifications, you will get the message – “No Compliance Record has been generated for you.”

Step 4: Select information Category

An “E” mark can be seen against the information category for which you have received the communication. E means expected.

Step 5: Select the Transaction

Select the transaction for which you need to respond. The transaction for which the feedback is needed would be marked as expected.

Step 6: Submit the Response

From the options, select the most appropriate response:

• Information is correct
• Information is not fully correct
• Income is not taxable
• Information relates to other PAN/year
• Information is duplicate/included in other displayed information
• Information is denied

The response will be sent to the Income Tax Department for further processing.

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Preliminary Response

If you receive an Income Tax e-Campaign notice, there will be a "Preliminary Response" section where you need to answer questions. These questions depend on the campaign type, like whether you filed an ITR or made certain high-value transactions.

For example, if the campaign is about non-filing of ITRs:

• Click "Provide Response" in the "Preliminary Response" section.
• Choose your answer via the drop-down menu.
• Provide additional details depending on your answer:
• Filed ITR: Enter the acknowledgment number, date, filing mode (e-filed or paper), circle/ward/city, and optional remarks.
• Didn't file ITR: Select the reason and add any comments.
• Complete all information and submit your response. You can download it later from the "Activity History" tab.

Note: You won't see this section if you don't have any active e-campaigns or e-verifications.

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Submit Feedback On Information In AIS

You have to provide feedback on the information within the e-campaign where no feedback has been previously given. Make sure you provide the feedback in the L1 information, which is designated as 'Expected,' as indicated in the attached screenshot.

For guidance on providing feedback, refer to the link: Submit feedback on information in AIS.

This process enables you to submit a response to the income tax department regarding the notice on high-value transactions or non-filing of the income tax return.

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E-Campaign for Voluntary Compliance

CBDT has launched an electronic campaign (E-campaign) to assist taxpayers in resolving mismatches between the income and transactions reported in the Annual Information Statement (AIS) and those disclosed in Income Tax Returns (ITRs). This e-campaign is for the voluntary compliance of income tax for the convenience of taxpayers. The campaign focuses on the assessees/taxpayers who are either:-

• Non-filers of the income tax return
• Have discrepancies/deficiencies in their returns

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Who can Receive Email/SMS From the Income Tax Department?

Under the e-campaign initiative, the Income Tax department communicates via emails or SMS to specific taxpayers to validate their financial transactions, sourced from diverse channels like SFT, TDS, TCS, and other avenues. Information encompassing GST, imports/exports, and dealings in securities, derivatives, commodities, and mutual funds can be gathered from third-party sources.

If the income tax department identifies that certain information related to your high-value transaction, which does not appear to be in line with the income tax return filed by you for AY 2023-24, you can receive an email or sms.

You might receive an email/SMS from the e-campaign if:

• Non-filing of Income Tax Return
• Discrepancies/deficiencies in your Income Tax Returns
• E-Campaign for Voluntary Compliance
  
  

The Income Tax Department has initiated an e-campaign, sending messages and emails to select taxpayers who have either missed filing their Income Tax Returns or failed to report high-value transactions. The primary goal of this campaign is to encourage voluntary compliance, helping taxpayers avoid notices and scrutiny.

These e-campaign alerts or High-Value Transaction (SFT) notices typically arrive several months after the original transaction date. Your response will depend on whether revisions are still possible. If within the time limit, promptly file your belated or revised return, ensuring all transactions reported by the department are included, and settle any outstanding taxes.

If you have also received an email/SMS from the income tax department for high-value transactions, you can consult our tax experts to get accurate guidance on how to respond to such notices.

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