Income Tax High-Value Transactions – SFT Thresholds and How to Respond to Notices

High-value transactions themselves are not illegal or even unusual for many taxpayers — but failing to understand how they're tracked and reported can lead to unexpected compliance notices that catch people off guard. Understanding the specific SFT thresholds, how the AIS reconciliation process works, and exactly how to respond when a mismatch is flagged keeps you ahead of any potential scrutiny.

This page covers:

• What qualifies as a high-value transaction and why it's monitored
• Complete SFT threshold table across transaction types
• How the Income Tax Department tracks these transactions
• How credit card spending specifically gets monitored
• Step-by-step process to respond to a compliance notice
• Submitting feedback on AIS discrepancies
• What to do if Form 26AS shows SFT transactions you don't recognise
• Penalties for non-reporting

High-value transactions refer to large or unusual financial activities that exceed specified limits set by the Income Tax Department — big purchases, investments, deposits, or credit card spends that may indicate potential undisclosed income. To maintain transparency and curb tax evasion, banks, financial institutions, mutual fund houses, and registrars are legally required to report such transactions under the Statement of Financial Transactions (SFT).

These reports help the Income Tax Department verify whether your declared income matches your actual financial behaviour. Importantly, high-value transactions themselves are not illegal — but failing to report income that supports them can trigger scrutiny, making it essential to understand exactly what counts and how the system works.

Note the property purchase threshold specifically — at Rs. 30 lakh, this is considerably lower than many other transaction categories, meaning even moderately priced property purchases across most Indian cities will trigger SFT reporting.

The department uses an integrated, PAN-based reporting and monitoring system. All banks, financial institutions, registrars, and other reporting entities file SFT reports annually, linked directly to your PAN — allowing the department to consolidate all your major financial activities into your Annual Information Statement (AIS).

Once reported, the system automatically compares your declared income against your spending, deposit, and investment patterns. Any significant mismatch can trigger alerts or formal compliance notices.

The tracking process, step by step:

• PAN-based reporting consolidates all large transactions across every institution you deal with
• SFT data flows directly into your AIS for review
• Automated systems detect unusual spikes or inconsistencies between declared income and actual transaction volume
• Mismatches may lead to e-campaign notifications via email or SMS alerts
• Non-response to these alerts may lead to further scrutiny or formal assessments

Credit card usage itself is not taxable — but high-value credit card payments are specifically monitored to check whether your declared income genuinely supports your spending patterns. If you frequently make large purchases while filing comparatively low income, the system may flag this inconsistency for review.

Banks report both cash and non-cash credit card bill payments above the specified SFT limits (Rs. 1 lakh cash, Rs. 10 lakh non-cash annually). Practical implications include:

• High spending without matching declared income can trigger AIS alerts
• Large cash payments specifically toward credit card bills may draw additional scrutiny
• Maintaining clear records of major purchases helps justify spending patterns if questioned
• Consistent, unexplained mismatches over multiple years can escalate to formal scrutiny

1. Log in to your income tax e-filing account
2. Navigate to 'Pending Actions' > Compliance Portal > ‘e-Campaign (relevant assessment year onwards)’
3. Review the flagged transaction details carefully against your own financial records
4. Select the relevant response category — confirming the transaction is correct, partially correct, a duplicate, belonging to another person, or not related to you at all
5. Submit your response with any necessary supporting documentation or clarification

This initial submission is known as a preliminary response — your first formal reaction submitted through the AIS or compliance portal when the department identifies a potential mismatch, helping clarify the transaction's status before any further action is initiated.

AIS may sometimes reflect incorrect, duplicate, or misreported transactions due to genuine reporting errors by banks or other institutions — this is more common than many taxpayers realise. Submitting feedback allows you to help the department correct these discrepancies, ensuring your tax calculations remain accurate.

Feedback options typically include marking a transaction as: correct, partially correct, a duplicate entry, belonging to another person (such as a joint account holder), or not relating to you at all. This process ensures your tax return genuinely reflects your actual financial activity, helping you avoid unnecessary notices or follow-up inquiries down the line.

If your Form 26AS reflects SFT transactions, this means institutions have reported high-value activities linked to your PAN. Review these carefully:

1. Cross-check the transaction amount against your own bank or investment statements
2. Verify whether the transaction genuinely belongs to you or a joint account holder — mismatched attribution is a common source of confusion
3. Check your AIS for detailed reporting and confirm both sources align
4. If incorrect, submit feedback through AIS to flag the discrepancy
5. If correct but not reflected in your originally filed ITR, consider filing a revised or updated return to include it
6. Maintain documentation to justify the transaction if further questioned
7. Respond to any compliance notice immediately rather than letting it go unaddressed

The e-campaign is a specific Income Tax Department initiative promoting voluntary compliance, notifying taxpayers about mismatches between declared income and financial transactions reported under SFT or AIS. Launched through SMS and email alerts, it encourages taxpayers to verify information, correct discrepancies, and file accurate returns before the matter escalates to formal scrutiny.

This campaign specifically focuses on non-filers, under-reporters, and cases with identified income-transaction mismatches — giving taxpayers a genuine opportunity to self-correct before facing more formal assessment procedures.

Given that property purchases above Rs. 30 lakh trigger mandatory SFT reporting, anyone financing a property purchase through a home loan should expect this transaction to appear in their AIS. Maintaining clean, well-documented income records — particularly your ITR filings alongside your loan documentation — ensures this reported transaction reconciles smoothly against your declared financial profile.

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Under Section 271FA, failure to report high-value transactions attracts a penalty of Rs. 500 per day after 31st May, escalating to Rs. 1,000 per day once the deadline expires following receipt of a notice from the Income Tax Department. This penalty structure applies primarily to reporting entities (banks, registrars) rather than individual taxpayers directly, though individual non-compliance in responding to related notices can separately trigger scrutiny consequences.

Understanding SFT thresholds and the AIS reconciliation process demystifies what can otherwise feel like an intimidating compliance notice — proactive review, timely response, and accurate documentation keep your tax profile clean and largely notice-free. Bajaj Finance offers home loans from 7.25% p.a.* with amounts up to Rs. Rs. 15 Crore* and tenures up to 32 years. Check your eligibility today.