In this guide
From 1 April 2026, the Income-tax Act, 2025 and Income-tax Rules, 2026 introduced a revised framework for reporting high-value financial transactions.
Banks, credit-card issuers, property registrars and other specified entities report certain transactions to the Income Tax Department through the Statement of Financial Transactions (SFT).
This does not mean that crossing a reporting limit automatically creates tax or a penalty. The primary purpose is information reporting. Problems generally arise when the transaction cannot be reconciled with the taxpayer’s disclosed income, assets or legitimate source of funds.
1. Cash Deposit in Savings Account: ₹10 Lakh / ₹5 Lakh Rule
Under the Income-tax Rules, 2026, cash deposits in one or more accounts other than current accounts and time deposits are reportable when the aggregate during the financial year reaches:
| Person | Cash Deposit Reporting Threshold |
|---|---|
| Person having PAN | ₹10 lakh or more |
| Person not having PAN | ₹5 lakh or more |
The ₹5 lakh threshold for a person without PAN is an important new feature under the 2026 rules.
Therefore, not having PAN does not mean that a high-value transaction becomes invisible to the tax system.
2. Splitting Cash Deposits Does Not Avoid Reporting
The limits are generally tested on an aggregate basis during the financial year.
For example, depositing:
- ₹1 lakh in June;
- ₹2 lakh in August;
- ₹3 lakh in December; and
- ₹4 lakh later in the year
does not mean that each transaction is considered independently.
Where the prescribed aggregate threshold is reached, the reporting requirement can arise.
Therefore, taxpayers should focus on maintaining a genuine explanation for the source of funds rather than attempting to remain below a limit through multiple smaller deposits.
3. Current Account Cash Deposit and Withdrawal: ₹50 Lakh
For one or more current accounts of a person, banks are required to report aggregate:
- Cash deposits of ₹50 lakh or more, and
- Cash withdrawals of ₹50 lakh or more
during a financial year.
This reporting threshold is particularly relevant for businesses that conduct substantial cash transactions.
Again, ₹50 lakh is a reporting threshold, not a prohibition on withdrawing or depositing more than ₹50 lakh.
4. TDS on Cash Withdrawal: Major Change from 1 April 2026
Under the earlier Section 194N framework, different limits applied depending on the taxpayer’s ITR filing history.
For certain non-filers, TDS could begin at cash withdrawals above ₹20 lakh.
Under the Income-tax Act, 2025, the provision now falls under Section 393.
For persons other than specified co-operative societies, the new provision prescribes:
2% TDS where cash withdrawals exceed ₹1 crore.
For specified co-operative societies, the threshold is ₹3 crore.
This removes the earlier separate ₹20 lakh threshold for certain non-filers under the new Act.
5. Fixed Deposits of ₹10 Lakh or More
Banks and specified financial institutions also report certain time deposits aggregating to ₹10 lakh or more during the financial year.
Renewal of an existing time deposit is excluded from this particular reporting category.
For example, if a taxpayer places several new fixed deposits during the year and the aggregate reaches ₹10 lakh, the transaction may be reported.
Reporting itself does not mean the FD is taxable. The Department may simply use the information to compare the investment with the taxpayer’s disclosed financial position.
6. Credit Card Payment Reporting Limits
Credit-card issuers are also required to report high-value payments.
The current thresholds are:
| Credit Card Payment | Reporting Threshold |
|---|---|
| Payment in cash | ₹1 lakh or more in a financial year |
| Payment through modes other than cash | ₹10 lakh or more in a financial year |
These limits apply to aggregate payments against one or more credit cards issued to the person.
A taxpayer consistently reporting very low income while making substantial credit-card repayments may therefore need to be able to explain the source.
7. Property Transactions: New ₹45 Lakh Reporting Threshold
A significant change under Rule 237 of the Income-tax Rules, 2026 relates to immovable property.
Purchase, sale, gift or a joint-development agreement involving immovable property is reportable where:
- The transaction amount is ₹45 lakh or more, or
- The stamp duty value is ₹45 lakh or more.
The earlier SFT reporting threshold under the old framework was ₹30 lakh. The 2026 Rules have increased this to ₹45 lakh.
This SFT reporting limit should not be confused with the separate ₹50 lakh threshold relevant to TDS on purchase of immovable property under the income-tax law.
8. Stamp Paper Purchases Are Also Reportable
The new rules also specifically bring certain high-value stamp-paper purchases into the reporting framework.
Rule 237 provides reporting where a stamp-paper purchase is:
- ₹2 lakh or more in one transaction for a person having PAN, or
- ₹1 lakh or more in one transaction for a person without PAN.
This gives the Income Tax Department another data point for identifying high-value transactions that may need to be reconciled with disclosed income or assets.
9. Can the Income Tax Department Check Social Media?
The Income-tax Act, 2025 expressly defines “virtual digital space” broadly.
It includes areas such as:
- Email servers;
- Social-media accounts;
- Online investment accounts;
- Trading accounts;
- Banking accounts;
- Cloud servers; and
- Digital application platforms.
However, this should not be interpreted to mean that the Income Tax Department casually monitors every taxpayer’s social-media profile as part of routine assessment.
These provisions are particularly relevant in the context of statutory search and investigation powers.
So the claim that a luxury car or foreign-trip photo will automatically generate an income-tax notice would be an overstatement.
10. High-Value Transaction Does Not Automatically Mean Tax Notice
The most important rule is simple:
There is nothing inherently wrong with making a high-value transaction if the source is legitimate and properly documented.
For example, a ₹20 lakh bank deposit may arise from:
- Sale of an asset;
- Withdrawal from another account;
- Loan proceeds;
- Gift from an eligible source;
- Business receipts;
- Previously accumulated disclosed savings; or
- Taxable income already properly reported.
The issue arises when the financial transaction does not reasonably reconcile with the taxpayer’s records or tax disclosures.
Banks and other entities provide information to the Income Tax Department precisely so that such transactions can be matched against reported financial data.
Important 2026 Bank Transaction Limits at a Glance
| Transaction | Reporting / TDS Limit |
|---|---|
| Savings-type cash deposits with PAN | ₹10 lakh |
| Savings-type cash deposits without PAN | ₹5 lakh |
| Current account cash deposits | ₹50 lakh |
| Current account cash withdrawals | ₹50 lakh |
| New fixed/time deposits | ₹10 lakh |
| Credit-card payment in cash | ₹1 lakh |
| Credit-card payment other than cash | ₹10 lakh |
| Immovable property SFT reporting | ₹45 lakh |
| Stamp paper purchase with PAN | ₹2 lakh in one transaction |
| Stamp paper purchase without PAN | ₹1 lakh in one transaction |
| Cash withdrawal TDS for most persons | Above ₹1 crore |
Reporting Limit Is Not a “Safe Limit”
Taxpayers should not treat these figures as amounts that can safely be deposited or spent without explanation.
For example:
₹9.90 lakh cash deposit does not automatically become tax-safe merely because it is below a ₹10 lakh SFT threshold.
The underlying source of the money remains important.
Similarly, crossing ₹10 lakh does not mean tax becomes payable merely because the bank reports the transaction.
The correct approach is to maintain appropriate documentation and ensure consistency between:
- Income reported in ITR;
- Bank deposits;
- Investments;
- Property purchases;
- Loans and gifts;
- Business turnover; and
- Other major financial transactions.
For professional assistance with ITR filing and income-tax notices, visit:
https://taxclear.in/itr-filing/
https://taxclear.in/legal-services/
FAQs
Is cash deposit above ₹10 lakh illegal?
No. ₹10 lakh is a reporting threshold for specified cash deposits where the person has PAN. A legitimate deposit can exceed this amount, provided the source can be explained.
What is the cash deposit limit if I do not have PAN?
Under the Income-tax Rules, 2026, specified cash deposits aggregating to ₹5 lakh or more for a person without PAN are reportable.
Does the bank report cash withdrawals above ₹50 lakh?
For current accounts, aggregate cash withdrawals of ₹50 lakh or more during the financial year fall under SFT reporting.
When is TDS deducted on cash withdrawals from 1 April 2026?
Under Section 393 of the Income-tax Act, 2025, the general threshold discussed for persons other than specified co-operative societies is ₹1 crore, with TDS at 2% on the amount above the threshold.
Are property transactions above ₹45 lakh reported?
Yes. Under the 2026 SFT rules, purchase, sale, gift or joint-development transactions involving immovable property can be reported where the consideration or stamp duty value is ₹45 lakh or more.
Will crossing an SFT limit automatically cause an income-tax notice?
No. Reporting does not automatically mean tax evasion or a notice. The key question is whether the taxpayer can properly explain and document the source of the transaction.
