Wondering how the Income Tax Department tracks your FDs, credit card spends, or property purchases? Learn how SFT, AIS, and AI are used to detect mismatches in your ITR in this expert 2025 guide.
📊 How Does the Income Tax Department Know About Your Money?
If you’ve ever thought, “How does the Income Tax Department know I deposited ₹12 lakh or bought property?” — you’re not alone.
The truth is: your bank, mutual fund house, registrar, and even credit card provider reports it.
Here’s everything salaried and self-employed taxpayers must know in 2025.
https://www.incometax.gov.in/iec/foportal/ais-faq
🔍 How Your Transactions Are Tracked
The Income Tax Department uses multiple data sources under Specified Financial Transactions (SFT) and Form 61A reporting. These are submitted by banks, NBFCs, mutual funds, registrars, and more.
Common examples of reported transactions:
| Transaction Type | Reporting Threshold |
|---|---|
| Cash in Savings A/c | > ₹10 lakh/year |
| FD or RD Deposits | > ₹10 lakh/year |
| Property Purchase | > ₹30 lakh |
| Credit Card Payment | > ₹1 lakh (cash) / ₹10 lakh (total) |
| Mutual Fund Investment | > ₹10 lakh/year |
| Cash Purchase of Goods | > ₹2 lakh |
📌 Even if you’re not taxable, these can still trigger alerts.
https://www.incometax.gov.in/iec/foportal/ais-faq
⚠️ What Happens If There’s a Mismatch?
A mismatch between your Income Tax Return (ITR) and reported financial activity can get flagged by CASS (Computer Assisted Scrutiny Selection).
Example:
Your ITR shows ₹4.5 lakh income, but credit card expenses total ₹7 lakh? That inconsistency could lead to a Section 143(2) notice.
🧾 What Is AIS & Why It’s Crucial?
AIS (Annual Information Statement) is a digital report card that shows your:
- FD interest
- Mutual fund transactions
- Property registrations
- TDS/TCS
- Dividend payouts
- Rent income
- Crypto trades
✅ Always check your AIS before filing ITR to avoid surprise tax notices.
https://www.incometax.gov.in/iec/foportal/ais-faq
📄 Form 26AS vs AIS – What’s the Difference?
| Feature | Form 26AS | AIS |
|---|---|---|
| Shows | TDS, TCS, Refunds | Detailed financial transactions |
| Purpose | Reconcile tax payments | Track all incomes & spends |
| Source | TRACES portal | AIS Portal (via income tax site) |
✅ Use both to avoid filing mistakes.
🛡️ Pro Tips to File ITR Accurately
Follow this checklist:
- ✅ Reconcile ITR with Form 26AS & AIS
- ✅ Report income from rent, side hustles, FD, crypto
- ✅ Keep proof of deductions & expenses
- ✅ Declare even exempt incomes (e.g. agricultural income)
- ✅ File before deadline to avoid late fees
❌ Mistakes That Trigger Income Tax Notices
- Large credit card usage without matching income
- Unreported crypto income or property deals
- Claiming false deductions (e.g. home loan interest without loan)
- Not reporting bank interest over ₹10,000
- Using cash for high-value purchases
📌 Long-tail Keyword: “How to avoid tax notice after large cash deposit in 2025”
📘 FAQs – How Income Tax Department Tracks Financial Data
<ol> <li><strong>How does the Income Tax Department know about my bank deposits?</strong><br> Banks report deposits over ₹10 lakh/year under SFT via Form 61A.</li> <li><strong>What transactions are reported to the income tax department?</strong><br> FDs over ₹10 lakh, property purchases, high-value credit card payments, mutual fund investments above ₹10 lakh/year, etc.</li> <li><strong>Will I get a notice for depositing ₹12 lakh in FD?</strong><br> Possibly, if you haven’t reported the source or matching income in your ITR.</li> <li><strong>What is AIS in income tax?</strong><br> AIS (Annual Information Statement) is a full list of your financial activity — including interest, rent, and capital gains — used to verify your return.</li> <li><strong>Difference between Form 26AS and AIS?</strong><br> Form 26AS shows TDS, refunds, taxes paid; AIS shows full financial transactions. Both are needed for accurate filing.</li> </ol>
🧠 Final Word: Transparency Is Your Best Tax Shield
Whether you’re a salaried employee, freelancer, or business owner — the IT Department has digital visibility into your spending and investments.
➡️ File your return correctly
➡️ Check AIS and Form 26AS
➡️ Preserve receipts & agreements
➡️ Don’t ignore even a small mismatch
👉 Contact https://wa.me/qr/GEYJOKSR22GFA1
📧 Or email: bpanpaliya@gmail.com
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