In today’s digital era, particularly when the sums are substantial, the Income Tax Department is closely monitoring your spending, saving or investing of money. Whether it’s online transfers, big deposits or property transactions, your financial footprints are being monitored. Believe the tax department won’t discover anything unless you notify them? Think again.
Let’s go over five financial moves—five money moves—that could subtly set off an alert and maybe send a tax notification to your mailbox. Don’t worry; we will also provide details on how to stay on the safe side.
1. Cash in, Cash out: Savings Accounts Under the Scanner
Picture this: You occasionally deposit little sums of money, and before you know it, it totals more than ₹10 lakh in one fiscal year. You might be regularly depositing or pulling out big chunks of cash from your savings account without giving it much thought. Once the total amount goes over ₹10 lakh in a year, the bank quietly passes that info along to the tax department. And if it’s a current account, the bar is even higher—₹50 lakh. So, if there’s a lot of cash flowing in and out, don’t be surprised if the tax department comes knocking to ask, “What’s the story behind all this money?”
2. Significant Fixed Deposits: Be Ready to Clarify
Imagine you’ve been saving up and finally choose to invest ₹10 lakh or more in fixed deposits. Although this is a wise financial decision, it also puts you under the tax department’s visibility. Whether you deposit by cash or online, banks and financial institutions document such significant FD investments.
Though the tax department might not care if you have interest, they will want to know how you acquired that first ₹10 lakh. Thus, have your income documents close by.
3. Playing large in stocks or mutual funds? The Tax Radar is Watching
You’ve made up your mind to make a significant investment—purchasing bonds, stocks, mutual funds or debentures worth over ₹10 lakh. Although this is a fantastic approach to generate money, be aware that the tax department receives reports on your investing activity via channels like NSDL or CDSL.
Once more, there is nothing illegal about investing your money but be ready to explain where that money came from. Questions might head your way if your tax returns don’t show enough revenue.
4. Swiping Big? Credit Card Payments Might Raise Eyebrows
Believe paying off your credit card debt in cash is no major deal? Reconsider. If you make a cash payment of ₹1 lakh or more against your credit card payments in a year, the issuing firm has to notify the government. Whether you are using cash or not, spending ₹10 lakh or more in any way is sure to draw notice.
Credit cards typically mirror lifestyle choices, and big payments without corresponding income statements could raise red flags. So, just be sure that the way you spend money makes sense with what you officially earn.
5. Buying or selling property: The department already knows
Buying your ideal house or selling some land? If the property is registered for ₹30 lakh or more, the tax department gets notified right away. What matters is not just the cash part, but the full value of the transaction.
You will probably be requested to clarify the source of the money. Whether it was a loan, savings or sale of another asset, have a distinct path.
Here is the bottom line: transparency triumphs.
Getting a notice does not automatically mean you are in trouble. Many times, it’s simply the department seeking clarification. You have nothing to worry about so long as your income is accurately reported and you have documentation to back your large transactions.
The greatest advice is to stay organized. Record all significant transactions, file truthful tax returns and if notifications come, don’t disregard them. The foundation is readiness, not regret.
