The Income Tax Department keeps a close watch on financial transactions to ensure compliance with tax laws. While many people follow the rules diligently, certain everyday banking activities can unexpectedly draw the attention of tax authorities. According to recent reports by The Financial Express, there are 10 common transactions that can put your savings account under the tax radar.
Transactions That May Trigger Notices
- High-value deposits – Frequent or large cash deposits can be flagged, especially if they exceed the prescribed limits.
- Unexplained credits – Any incoming funds without proper documentation or source proof may attract scrutiny.
- Multiple cash withdrawals – Large or repeated withdrawals from savings accounts can be questioned.
- Transfer to multiple accounts – Transferring money to several accounts within a short span may raise concerns.
- International remittances – Sending or receiving significant sums abroad requires proper documentation to avoid triggering IT alerts.
- Investment in high-value assets – Sudden purchases of properties, vehicles, or luxury items linked to savings accounts are often monitored.
- Repeated deposits below the threshold – Structuring deposits to stay below reporting limits is considered suspicious.
- Unusual merchant payments – Transactions to unknown or non-standard vendors can attract attention.
- Loan repayments or advance payments – Large or inconsistent repayments might trigger IT queries.
- Frequent third-party transactions – Payments or receipts involving multiple third parties, especially without explanation, may raise red flags.
Why It Matters
The Income Tax Department uses these signals to identify potential tax evasion or unreported income. Being aware of these common triggers helps individuals maintain transparency, avoid penalties, and ensure their accounts remain compliant.
Tax experts advise keeping proper records and documentation for all major financial transactions. Regularly reconciling bank statements, declaring additional income, and reporting foreign remittances can also help stay on the safe side.
Summary
- Everyday banking activities can sometimes trigger IT scrutiny.
- High-value deposits, frequent transfers, and international remittances are common triggers.
- Maintaining documentation and transparency is key to avoiding notices from the Income Tax Department.
By staying informed and cautious, account holders can continue their transactions smoothly without unnecessary hassles.
