With the increasing use of digital banking and tighter tax monitoring, the Income Tax Department continues to track high-value financial transactions through the Statement of Financial Transactions (SFT) system. Banks, financial institutions, and registrars report certain transactions to tax authorities if they cross specified limits.
From April 2026, taxpayers should be aware of important banking thresholds that may trigger reporting or scrutiny.
Cash Deposits in Savings Accounts
One of the most common high-value transactions is cash deposits in bank accounts.
Key limit
- ₹10 lakh or more in cash deposits in a savings account during a financial year .
If this threshold is crossed, the bank must report the transaction to the Income Tax Department under SFT reporting rules.
What taxpayers should do?
- Maintain proof of income source.
- Ensure deposits match declared income in ITR.
Cash Deposits in Current Accounts
Current accounts have higher limits because they are mainly used for business activities.
Reporting limit
- ₹50 lakh or more in cash deposits in a current account during a financial year .
Large business deposits that exceed this limit may be flagged for verification.
Cash Deposits or Withdrawals Requiring PAN
Under draft rules being discussed for 2026:
- PAN may be required when cash deposits or withdrawals exceed ₹10 lakh in a financial year across bank accounts.
Currently:
- PAN is required if a cash deposit exceeds ₹50,000 in a single day .
Cash Withdrawals from Bank Accounts
High cash withdrawals can also attract tax monitoring.
TDS rules
- Cash withdrawals above ₹1 crore in a year may attract 2% TDS .
- If a person has not filed ITR for the last three years, TDS may apply on withdrawals above ₹20 lakh .
Credit Card Payments
Credit card spending is another monitored transaction.
Reporting thresholds
- Cash payments of ₹1 lakh or more toward credit card bills may be reported.
- Total payments above ₹10 lakh in a year can also come under tax monitoring.
Fixed Deposit (FD) Investments
Banks must also report large term deposits.
Reporting threshold
- ₹10 lakh or more in time deposits (FDs) during a financial year may be reported to the tax authorities.
Real estate deals are closely tracked.
Reporting limit
- Property transactions ₹30 lakh or more are generally reported to the Income Tax Department.
This helps tax authorities verify capital gains and sources of funds.
Important Note for Taxpayers
It is important to understand that these limits are not restrictions on transactions. They simply mean that the transactions will be reported to the Income Tax Department and may be cross-checked with your Income Tax Return (ITR) and Annual Information Statement (AIS) .
If the transaction amount does not match your declared income, the department may issue a notice asking for clarification.
FAQs
What is the cash deposit limit in a savings account before it is reported to the Income Tax Department?
Cash deposits of ₹10 lakh or more in a financial year in a savings account are reported to the Income Tax Department under the Statement of Financial Transactions (SFT).
What is the reporting limit for cash deposits in a current account?
Cash deposits of ₹50 lakh or more in a financial year in a current account are reported to the tax authorities.
Do banks report high-value transactions to the Income Tax Department?
Yes, banks and financial institutions report certain high-value transactions through the SFT reporting system.
What is the limit for cash withdrawals before TDS applies?
Cash withdrawals exceeding ₹1 crore in a financial year may attract 2% TDS under Section 194N.
What happens if a person has not filed income tax returns for the last three years?
If a person has not filed ITR for the previous three years, TDS may apply on cash withdrawals above ₹20 lakh.
Is PAN required for large bank transactions?
Yes, PAN is required for cash deposits above ₹50,000 in a single day or for certain high-value banking transactions.
Are credit card payments monitored by the Income Tax Department?
Yes, cash payments of ₹1 lakh or more or total payments exceeding ₹10 lakh in a year toward credit cards may be reported.
Are fixed deposit investments reported to tax authorities?
Yes, time deposits or fixed deposits of ₹10 lakh or more in a financial year may be reported under SFT rules.
Do these limits restrict bank transactions?
No, these limits do not restrict transactions; they only trigger reporting to the Income Tax Department for monitoring purposes.
Can large bank transactions lead to an income tax notice?
Yes, if high-value transactions do not match the income declared in your Income Tax Return (ITR), the department may seek clarification.
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