Introduction
From 1 April 2026, the Income-tax Act, 2025 applies for Tax Year 2026-27 onwards. The new Act uses the term Tax Year instead of the old “previous year” and discontinues the term “assessment year” for new-law years. However, returns for FY 2025-26 / AY 2026-27 will still be filed under the Income-tax Act, 1961.
For taxpayers, the most important practical point is this:
High-value transactions are increasingly visible to the Income Tax Department through SFT, AIS/Form 168, TDS, TCS, banks, brokers, registrars and other reporting entities.
This does not mean every high-value transaction is wrong. But if your transaction is genuine, you must be able to explain the source of money and report the correct income in ITR.
For ITR filing, AIS review, income tax notice reply and transaction-source explanation, visit TaxClear.in.
What Is SFT?
SFT means Statement of Financial Transaction.
Under the Income-tax Rules, 2026, Rule 237 requires specified reporting persons to furnish SFT in Form No. 165 for prescribed transactions. These include cash deposits, current-account cash transactions, FDs, credit card payments, property transactions, stamp paper purchases, insurance premium, foreign currency transactions and certain investment transactions.
In simple words:
Banks, post offices, registrars, insurers, brokers and other reporting entities may report specified transactions to the Income Tax Department.
What Is Form 168?
Under the new Act, Form 168 is the Annual Information Statement for Tax Year 2026-27 onwards. It reflects TDS, TCS, tax payments, SFT information, demand/refund details and other tax-related information linked to PAN. Taxpayers do not file Form 168 manually; it is generated by the Department based on data filed by reporting entities.-nked to PAN. Taxpayers do not file Form 168 manually; it is generated by the Department based on data filed by reporting entities. citeturn112341view2
So for Tax Year 2026-27 onwards, taxpayers should check:
- AIS/Form 168;
- TDS/TCS credits;
- SFT information;
- bank interest;
- dividend;
- share/mutual fund transactions;
- property transactions;
- refund/demand details.
Does Crossing SFT Limit Automatically Mean Notice?
No.
Crossing an SFT reporting limit does not automatically mean tax notice.
It only means the transaction may be reported to the Income Tax Department and may appear in AIS/Form 168.
A notice usually becomes a risk when:
- ITR is not filed;
- transaction source is not explained;
- income is under-reported;
- cash deposits do not match declared income;
- investment is high but income is low;
- AIS/Form 168 is ignored;
- incorrect ITR form is filed;
- capital gains are not reported;
- business receipts are shown wrongly as “other income”.
1. Number of Bank Accounts: Is There Any Limit?
There is no income-tax rule saying that an individual can keep only one, two or five bank accounts.
You may have multiple accounts.
But practically, too many accounts create issues such as:
- minimum balance charges;
- SMS/ATM/card charges;
- missed interest reporting;
- difficult reconciliation;
- forgotten accounts;
- mismatch in AIS/Form 168;
- difficulty explaining deposits.
Practical Advice
Keep only those bank accounts which you can manage and reconcile.
For normal taxpayers, one primary bank account, one backup account and one business/current account, where applicable, is usually easier to manage.
2. Cash Deposit in Savings Account
Under Rule 237, cash deposits in one or more accounts, other than current account and time deposit, are reportable if they aggregate to:
| Person | SFT Reporting Threshold |
|---|---|
| Person having PAN | ₹10 lakh or more in a financial year |
| Person not havine in a financial year |
This applies to savings-type accounts and similar accounts other than current accounts and time deposits. citeturn494000view0
Important Point
Do not misunderstand the “without PAN” threshold.
It does not mean the transaction is free from reporting. In fact, the reporting threshold is lower where PAN is not available.
3. Cash Deposit or Withdrawal in Current Account
For current accounts, cash deposits or cash withdrawals, including through bearer cheque, are reportable if the amount aggregates to:
| Transaction | SFT Reporting Threshold |
|---|---|
| Cash deposit in current account | ₹50 lakh or more in a financial yeafrom current account |
This threshold applies to one or more current accounts of a person. citeturn494000view0
4. Cash Purchase of Bank Draft, Pay Order or Banker’s Cheque
Cash payment for purchase of bank drafts, pay orders or banker’s cheques is reportable if it aggregates to:
| Person | SFT Reporting Threshold |
|---|---|
| Person having PAN a financial year | |
| Person not having PAN | ₹5 lakh or more in a financial year |
This is reported by banks/co-operative banks. citeturn494000view0
5. Time Deposits / FD / RD
One or more time deposits, other than renewal of another time deposit, are reportable if they aggregate to:
| Transaction | SFT Reporting Threshold |
|—|—:|| ₹10 lakh or more in a financial year |
This may be reported by banks, post offices, Nidhis and NBFCs accepting public deposits. citeturn494000view0
FD Interest Is Separately Visible
Even if the deposit itself is not a problem, interest on FD/RD is taxable unless specifically exempt.
Int is reportable for pre-filling purposes. Rule 237 also covers interest paid or credited as reportable information for pre-filling. citeturn494000view2
6. Credit Card Bill Payments
Credit card bill payments are reportable if they cross the following limits:
| Payment Mode | SFT Reporting Threshold |
|---|---|
| Cash payment against credit card bill | ₹1 lakh or more in a financial year |
| Payment by any othmore in a financial year |
This applies to payments made against bills raised for one or more credit cards issued to that person. citeturn494000view0
Practical Point
If you pay large credit card bills, keep source records such as:
- salary credit;
- business receipts;
- bank transfer records;
- loan documents;
- reimbursement proof;
- family gift proof, where applicable.
7. Purchase or Sale of Immovable Property
Under Rule 237, purchase, sale, gift or joint development agreement of immovable property is reportable if:
| Transaction | SFT Reporting Threshold |
|—|–ction | ₹45 lakh or more |
| Stamp duty value | ₹45 lakh or more |
The reporting is by Inspector-General/Registrar/Sub-Registrar. citeturn494000view1
Important Point
Even if actual consideration is lower, reporting can still happen if the stamp duty value is ₹45 lakh or more.
8. Purchase of Stamp Paper
Purchase of stamp paper is now specifically reportable if:
| Person | SFT Reporting Threshold |
|---|---|
| Person having PAN | ₹2 lakh or mo |
| Person not having PAN | ₹1 lakh or more in one transaction |
This reporting is by Stock Holding Corporation of India Limited. citeturn494000view1
9. Insurance Premium
Receipt from any person against insurance premium is reportable if it aggregates to:
| Person | SFT Reporting Threshold |
|---|---|
| Perso or more in a financial year | |
| Person not having PAN | ₹2.5 lakh or more in a financial year |
This is reported by the insurer. citeturn494000view1
Correction
Some online explanations mention ₹10 lakh/₹5 lakh for insurance premium. As per the official Rule 237 text, the threshold is ₹5 lakh with PAN and ₹2.5 lakh without PAN.
10. Foreign Currency / Forex Card / Traveller’s Cheque
Foreign currency sale, forex card loading, expense in foreign currency through debit/credit card, traveller’s cheque, draft or similar instrument is reportable if:
| Person | SFT Reporting Threshold |
|---|---|
| Person having PAN | ₹1nancial year |
| Person not having PAN | ₹5 lakh or more in a financial year |
This is reported by authorised persons under FEMA. citeturn494000view1
11. Shares, Mutual Funds and Listed Securities
For pre-filling ITR, Rule 237 requires reporting of:
- capital gains on transfer of listed securities;
- capital gains on transfer of units of mutual funds;
- dividend distributed;
*ited.
For listed securities and mutual fund transfers, the rule refers to all transactions, not only high-value transactions. citeturn494000view2
Practical Point
Even small share or mutual fund transactions may appear in AIS/Form 168.
Therefore, if you sell shares or mutual funds, report capita 12. Dividend Income
Dividend distributed is reportable for pre-filling.
Even small dividend amounts may appear in AIS/Form 168. citeturn494000view2
Dividend is taxable in the hands of the shareholderxempt.
13. Interest Income
Interest paid or credited by banks, post offices and NBFCs is reportable for pre-filling purposes. citeturn494000view2
Taxpayers should report:
- savings bank interest;
- FD interest;
- RD interest;
- post office interest;
- NBFC deposit interest;
- senior citizen savings scheme interest, where taxable.
Do not ignore small interest income.
14. Cash Receipt for Sale of Goods or Services
Receipt of cash payment for sale o reportable where the amount exceeds ₹2 lakh, subject to the reporting person being liable for audit under the relevant provision. citeturn494000view1
This is separate from the general restriction on receiving ₹2 lakh or more in cash in specified circumstances.
15. TDS on Cash Withdrawal
Under Section 393(3) of the Income-tax Act, 2025, TDS applies on cash withdrawals from one or more accounts maintained by a person with a bank/co-operative bank/post office.
The table provides:
| Recipient | Threshold | TDS Rate |
|---|---|---|
| Co-operative society recipient | ₹3 crore | 2% |
| Person other than co-operative society | ₹1 crore | 2% |
The official section uses the wording “on the entire amount” ceeds the threshold. Practical application should be checked carefully with bank/CBDT utility behaviour for the relevant tax year. citeturn112341view0
Important Correction
Do not blindly apply old examples about ₹20 lakh cash withdrawal for non-filers without checking the exact applicable provision for the relevant year. For Tax Year 2026-27, Section 393 of the 2025 Act should be checked.
16. TCS on Motor Vehicle and Luxury Goods
Under Section 394 o2025, TCS applies on sale consideration exceeding ₹10 lakh for:
- motor vehicle; and
- any other notified goods.
The rate is 1%. citeturn314828view0
CBDT has notified specified luxury goods above ₹10 lakh, such as wrist watch, art piec/rowing boat/canoe/helicopter, sunglasses, bag/purse, shoes, sportswear/equipment, home theatre system and horses for racing/polo. citeturn314828view1
TCS Is Not Extra Tax
TCS is collected against your PAN. You can claim credit while filing ITR, subject to Form 168/AIS reflection and correct reporting.
17. PAN and Aadhaar: Important Points
PAN is mandatory for income-tax filings, high-value financial transactions and tax correspondence. Aadhaar can be used in lieu of PAN in specified cases.
The Income Tax Department guidance states that PAN is required for persons depositing or withdrawing cash of ₹20 lakh or more annually, opening current/cash credit accounts, time deposits above specified limits, credit/debit card applications and others. It also states that where Aadhaar is quoted in place of PAN, it is treated as an application for PAN in specified transactions. citeturn318163view1
Practical Point
Do not assume that avoiding PAN prevents reporting.
Today, PAN, Aadhaar, bank account, mobile number, GSTIN and digital transaction trails can be connected.
18. Is UPI / NEFT / RTGS Reported?
UPI, NEFT and RTGS payments are not listed in Rule 237 in the same way as specific cash-deposit or credit-card thresholds.
However, this does not mean digital transactions are invisible.
If a case is selected for verification, bank statements and merchant records can be examined. For business taxpayers, digital receipts may also create GST-registration and income-tax reporting issues.
19. GST Registration Risk for Digital Receipts
Separate from income tax, GST registration may become mandatory when aggregate turnover crosses the prescribed threshold.
CBIC materials state that the threshold fo and ₹10 lakh for specified special category States, and for suppliers of goods it may be ₹40 lakh or ₹20 lakh depending on State. citeturn749725view0
So, if a shopkeeper or service provider receives high UPI collections, the issue may not be UPI itself. The real issue may be whether turnover crossed GST registration limits.
20. Is There Any Maximum Bank Balance Limit?
No fixed income-tax limit says that you cannot keep ₹10 lakh, ₹50 lakh or ₹1 crore in a bank account.
You can keep any genuine amount if you can explain the source.
The real question is not “how much balance is allowed?”
The real question is:
Can you prove where the money came from?
Source Examples
| Source of Money | Documents to Keep |
|---|---|
| Salary savings | Form 16, salary slips, bank statement |
| Business income | GST returns, invoices, books |
| Loan received | Loan agreement, lender details, bank trail |
| Gift from relative | Gift deed, donor bank statement |
| Property sale | Sale deed, capital gain working |
| FD maturity | FD advice, bank statement |
| Inheritance | Will/succession papers |
| Share sale | Broker capital gain report |
| Agricultural income | Land records, sale bills, mandi receipts |
21. When Is ITR Filing Mandatory Despite Low Income?
ITR filing is mandatory if income before specified deductions/exemptions exceeds the basic exemption limit.
It may also be mandatory in high-value cases even if income is below the exemption limit.
Official guidance lists mandatory filing cases such as:
- deposits over ₹1 crore in current accounts;
- foreign travel expenses exceeding ₹2 lakh;
- electricity bills exceeding ₹1 lakh;
- business turnover above ₹60 lakh;
- professional receipts above ₹10 lakh;
- TDS/TCS of ₹25,000 or more, oitizens;
- deposits exceeding ₹50 lakh in savings accounts;
- foreign assets or signing authority abroad for resident individuals. citeturn637010view0
22. Basic Exemption and ₹12 Lakh Rebate Confusion
Many taxpayers confuse “no tax up to ₹12 lakh” with “no ITR required up to ₹12 lakh.”
These are different concepts.
The new regime rebate may reduce tax liability, but ITR filing may still be mandatory if:
- income exceeds filing threshold;
- TDS/TCS refund is claimed;
- high-value transaction trigger applies;
- foreign asset reporting applies;
- business/profession turnover threshold applies;
- capital gains reporting is needed.
23. What If You Cross an SFT Limit?
Do not panic.
Crossing an SFT limit is not illegal by itself.
What You Should Do
- Keep transaction documents.
- Check AIS/Form 168.
- Match bank statements.
- Report correct income.
- File correct ITR form.
- Explain source of funds.
- Respond to any notice on time.
24. What If You Do Not File ITR?
If you cross reportable thresholds and do not file ITR, the department may issue a notice asking why return was not filed and what is the source of the transaction.
This is especially risky where:
- cash deposit is high;
- bank credits are high;
- property is purchased;
- shares/mutual funds are sold;
- TDS/TCS appears but ITR is not filed;
- business receipts are visible;
- GST threshold appears crossed.
25. Reassessment Notice Time Limits
For Tax Year 2026-27 onwards, reassessment provisions under the Income-tax Act, 2025 apply.
Section 280 requires information suggesting escaped assessment before a notice is issued. Section 281 provides an opportunity suing notice under Section 280. Official reassessment FAQ confirms that Sections 279 to 286 apply to TY 2026-27 and later years. citeturn530958search2
For older years governed by the 1961 Act, transition rules must be checked separately.
26. Practical Compliance Checklist
| Area | What to Do |
|---|---|
| Bank accounts | Maintain only manageable accounts |
| Cash deposits | Keep source proof |
| Current account | Maintain books and invoices |
| FDs/RDs | Report interest |
| Credit card | Keep repayment source proof |
| Property | Keep sale deed, registry and fund trail |
| Stamp paper | Keep purpose and agreement |
| Insurance premium | Keep premium receipt and source |
| Shares/MF | Report capital gains correctly |
| Dividend | Report as taxable income |
| Interest | Report even if small |
| TCS/TDS | Claim correct credit in ITR |
| GST | Check registration threshold |
| AIS/Form 168 | Review after year-end |
| Notices | Respond within time |
27. Common Mistakes to Avoid
| Mistake | Risk |
|---|---|
| Thinking only cash is tracked | Shares, dividend, interest and property are also reported |
| Not checking AIS/Form 168 | Mismatch notice |
| Ignoring small interest/dividend | Under-reporting |
| Filing ITR-1 despite business/capital gains | Defective/wrong return |
| Showing business receipts as other income | Scrutiny risk |
| Not filing ITR despite high deposits | Non-filing notice |
| Assuming UPI is always safe | Bank/GST data may still be examined |
| Not keeping source documents | Addition risk |
| Ignoring old notices | Demand/penalty risk |
| Believing every SFT entry is tax | Reporting does not automatically mean taxable income |
TaxClear View
The Income Tax Department is becoming more data-driven.
The safest approach is not to avoid genuine transactions. The safest approach is to:
- keep records;
- use banking channels;
- explain source;
- report income correctly;
- check AIS/Form 168;
- file the correct ITR;
- respond to notices on time.
High-value transactions are not a problem if they are genuine and properly reported.
The problem starts when taxpayers ignore reporting, do not file ITR, or cannot explain the source of funds.
Key Takeaways
- Income-tax Act, 2025 applies from 1 April 2026 for Tax Year 2026-27 onwards.
- SFT under Rule 237 is filed in Form 165 by reporting entities.
- Form 168 is the new AIS under the 2025 Act.
- Savings-type cash deposits of ₹10 lakh or more with PAN may be reported.
- Current-account cash deposits/withdrawals of ₹50 lakh or more may be reported.
- FD/time deposits of ₹10 lakh or more may be reported.
- Credit card bill payment of ₹1 lakh in cash or ₹10 lakh by other modes may be reported.
- Property purchase/sale/gift/JDA of ₹45 lakh or more may be reported.
- Stamp paper purchase of ₹2 lakh with PAN or ₹1 lakh without PAN may be reported.
- Insurance premium threshold is ₹5 lakh with PAN and ₹2.5 lakh without PAN.
- Capital gains on listed securities/MF units, dividend and interest may be reported for pre-filling.
- TCS applies at 1% on motor vehicle/notified luxury goods above ₹10 lakh.
- High-value transaction does not automatically mean tax notice.
- ITR filing and source documentation are the best protection.
Conclusion
From Tax Year 2026-27 onwards, taxpayers must be careful with high-value transactions because many financial activities are visible through SFT, AIS/Form 168, TDS, TCS and reporting entities.
There is no need to panic or stop genuine transactions. But every taxpayer should maintain documents, check AIS/Form 168, report correct income and file ITR wherever required.
For ITR filing, AIS/Form 168 review, high-value transaction explanation, income tax notice reply and tax compliance support, visit TaxClear.in.
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