The income tax department employs different data analyses to identify individuals who have either failed to file income tax returns or have provided incorrect income details. As part of this initiative, the IT department has collaborated with government agencies to gather information on individuals displaying high-value transactions but either not filing their ITR returns or underreporting their incomes. For such instances, the IT department is issuing notices to the individuals who fall in the said category.
So, if you have received an email or SMS regarding your high-volume transaction, this article will detail how to report your response to a high-value transaction through the e-campaign portal. But first, let’s understand what high-value transactions are.
Read More: Crypto Tax Guide India
What Are High-Value Transactions?
High-value transactions are specific financial activities that exceed a fixed monetary limit and must be reported to the Income Tax Department. These transactions are captured under Specified Financial Transactions (SFTs), which banks, registrars, financial institutions, and other reporting entities are required to submit.
Once reported, they become part of the taxpayer’s AIS and can be cross-verified with the income declared in the return.
Role of AIS in Monitoring
AIS plays a central role in monitoring these transactions by bringing together data from multiple sources. Banks, co-operative societies, stock exchanges, and even Virtual Asset Service Providers (VASPs) must report transactions linked to a taxpayer’s PAN.
The AIS then consolidates this data to create a complete financial profile, which is later compared against the ITR to detect mismatches.
General High-Value Transactions
The Income Tax Department tracks multiple categories of transactions that cross defined limits. These are reported by specific authorities through the Statement of Financial Transactions (SFT) and reflected in the AIS. Each category has its own threshold, and exceeding it can lead to closer monitoring. Here’s a table of what categorises as high-value transactions:
S. No. | Transactions | Threshold (INR) | Reporting Authority |
1 | Cash payment is accepted for acquiring a bank draft, banker’s cheque, pay order, or prepaid instruments issued by the Reserve Bank of India. | 10,00,000 | Cooperative societies or banks are required to disclose the transaction to the Director of Income Tax by submitting Form 61A. |
2 | Amount of cash deposited in a savings account | 10,00,000 | Post-master general, co-operative societies or Banks |
3 | Amount of cash withdrawn or deposited from a current account | 50,00,000 | Co-operative societies or banks |
4 | Buying or selling of immovable property/asset | 30,00,000 | The sub-registrar or property registrar must report such transactions via form 61A. |
5 | Investment in mutual funds, bonds, shares and debentures in cash (Transferring amount from one scheme to another does not require reporting) | 10,00,000 | Mutual fund trustees and companies which issue shares, bonds and debentures. |
6 | Paying credit card bills with cash | 1,00,000 | Banks issuing credit cards |
7 | Paying credit card bills other than cash | 10,00,000 | Banks issuing credit cards |
8 | Crediting any FOREX card, selling foreign exchange, spending in foreign currency using a credit or debit card or any other method. | 10,00,000 | Any authorised person registered under the Foreign Exchange Management Act, 1999 |
9 | Cash deposits in Fixed deposits or recurring schemes | 10,00,000 | NBFCs, Nidhi, co-operative societies, post offices, or banks. |
Cryptocurrency High-Value Transactions
Crypto transactions are tracked in the AIS in much the same way as other financial activities. Although there is no dedicated threshold defined only for cryptocurrencies, large trades often fall under existing Specified Financial Transaction categories. Virtual Asset Service Providers (VASPs) and exchanges report these trades, and the details are reflected in the taxpayer’s AIS for cross-verification.
Crypto-Linked Activity | Threshold for Flagging (INR) | Why It Gets Flagged |
Cash deposits or withdrawals tied to crypto | 10 lakh (savings) / 50 lakh (current) | To track funding sources for large crypto trades |
Investments in crypto via exchanges | 10 lakh | Treated like high-value securities investments |
Overseas crypto transactions | 10 lakh | Classified under foreign exchange spends |
Property purchases using crypto | 30 lakh | Reported like standard high-value property deals |
Credit card payments for crypto buys | 1 lakh (cash) / 10 lakh (non-cash) | Monitored as high-value spending activity |
How Does The Income Tax Department Trace High-Value Transactions?
Here’s how the IT department keeps track of high-value transactions made by any individuals during a financial year:
Enhanced Form 26AS Update
The tax authorities have recently enhanced Form 26AS to incorporate details related to Specified Financial Transactions (SFT). Additionally, they have introduced the ‘Annual Information Statement (AIS),’ providing a comprehensive overview of all financial information.
Compulsory Income Tax Return Filing
Individuals are mandated to file ITR if their income exceeds Rs 2,50,000. However, effective April 1, 2019, ITR filing is obligatory for individuals engaged in specific high-value transactions, even if their income falls below Rs 2,50,000.
Examples of such transactions include depositing Rs 1 crore in one or more current accounts or Rs 50 lakhs in one or more savings accounts in a single financial year.
Read More: Taxable Crypto Events in India
Why Do Transactions Get Flagged?
Transactions reflected in the AIS are not flagged without reason. They are highlighted when there is a mismatch, inconsistency, or unusual activity that does not align with declared income.
Discrepancies with Income Profile
The AIS is designed to compare financial activity with the taxpayer’s reported income. If someone declares an annual income of INR 5 lakh but makes transactions worth INR 20 lakh, the system marks this as unusual. Such gaps raise questions about the source of funds, and the taxpayer may be asked to explain or justify the mismatch to avoid further scrutiny.
Non-Reporting in ITR
Another major reason transactions are flagged is non-reporting. Even if the AIS already records high-value activities, if these are not reflected in the income tax return, it becomes an immediate red flag. The tax department treats this as potential under-reporting, which may result in a notice, penalties, or reassessment depending on the seriousness of the case.
Promoting Compliance
Flagging transactions also acts as a tool to promote voluntary compliance. By highlighting financial activities already visible to the department, the system encourages taxpayers to declare them in their return. This not only reduces the risk of penalties but also strengthens the habit of accurate reporting. It serves as both a warning and an opportunity to correct errors before they escalate.
The E-Campaign and Compliance Portal
The Income Tax Department has created the e-campaign and compliance portal to make it easier for taxpayers to respond to flagged high-value transactions. These platforms focus on encouraging voluntary and accurate reporting.
Purpose of the E-Campaign
The e-campaign is designed to notify taxpayers about discrepancies or missing details in their AIS. It serves as a proactive step that allows individuals to correct or confirm information before stricter measures are applied. This initiative focuses on guiding taxpayers to review their data and stay compliant, instead of penalising them at the outset.
How Taxpayers Receive Alerts?
Taxpayers usually receive alerts through email or SMS, indicating that specific transactions linked to their PAN have been flagged. These alerts contain instructions to log in to the compliance portal and verify the details. Once inside, taxpayers can view each flagged entry and provide the required feedback, ensuring their AIS reflects accurate and updated information.
Importance of Timely Action
Responding to high-value transaction alerts quickly is essential for avoiding scrutiny. When taxpayers clarify entries early, they eliminate the chances of penalties or reassessment. The system is built to encourage self-correction, giving individuals an opportunity to resolve discrepancies without harsh consequences. Delay or neglect, on the other hand, can lead to serious compliance issues.
Steps To Comply And Submit Response To e-Campaign Notice Online
If you’ve received an email, SMS or notice regarding a high-value transaction or non-filing of ITR, you can follow the below steps to submit your responses:
Step 1: Log in to your account on the income tax e-filing website. You must sign up on this platform by submitting the necessary details if you are new to the portal.
Step 2: Once logged in, click on Pending Actions. In the drop-down, select Compliance Portal.
Step 3: Now, select the relevant e-campaign to which you must submit your response.
Upon redirection from the e-filing portal, you will encounter the landing page of the e-campaign view. Choose the pertinent e-campaign and click Provide Feedback in AIS.
If you do not have any active e-campaigns or e-verifications, a message stating “No Compliance Record has been generated for you” will be displayed.
Step 4: Select the relevant information category marked with ‘e.’
Step 5: Once you have selected the information category, you must choose the transaction for which you must submit feedback. Such transactions will be marked as ‘Expected.’
Step 6: Now it’s time to submit your response. You can select the appropriate response from the below list:
- Information is correct.
- Information is not entirely correct.
- Information is not taxable.
- Information is not related to this PAN or year.
- Information is denied.
- Information is duplicated or included in other displayed formats.
Taxpayer Obligations And e-Campaign Categories for Response
The taxpayer is anticipated to respond to the following categories within the e-campaign framework:
- Preliminary response.
- Feedback on the response from the AIS
Preliminary Response
In the Preliminary Response section, taxpayers must address specific inquiries based on the campaign type, which could involve either non-filing an income tax return or certain high-value transactions conducted by the taxpayer.
Here’s a step-by-step guide on responding:
Step 1: Click the Provide Response button in the Preliminary Response section.
Step 2: On the subsequent page, respond by selecting the appropriate options from the provided drop-down menu.
Step 3: Furnish additional details as requested by the income tax department. For instance, if the campaign type is ‘Non-Filing of Income Tax Return,’ you need to provide details such as:
If ITR has been filed:
- Acknowledgment Number: Enter the acknowledgment number generated for the Income Tax Return filed for the relevant Assessment Year.
- Date: Select the date of return filing.
- Mode: Choose the mode of filing (e.g., e-filed or paper-filed returns).
- Circle/ Ward and City: Enter your circle/ward and city.
- Remarks: This is optional. You can choose to leave some remarks related to the filing.
If the ITR has not been filed:
- Reason: Select the reason for not filing the ITR.
- Remarks: Enter remarks for not filing the ITR.
Step 4: After entering all the relevant information, submit the response. You can download the preliminary response submitted from the Activity History screen.
If you do not have active e-campaigns or e-verifications, a message stating “No Compliance Record has been generated for you” will be displayed.
Submit Feedback On Information In AIS
You must offer input on the information within the electronic campaign where feedback still needs to be submitted. Specifically, you must provide feedback on the Level 1 (L1) information indicated as ‘Expected’ in the screenshot
By following these instructions, you can effectively respond to the notice from the income tax department regarding high-value transactions or an incomplete income tax return.
How Can KoinX Help With High-Value Crypto Transaction Reporting?
High-value transactions, especially in crypto, can be difficult to track when they involve multiple exchanges, wallets, or international transfers. Reconciling these records with AIS is often confusing and time-consuming, leaving taxpayers at risk of mismatches and notices. This is where KoinX becomes a reliable solution, helping traders manage reporting accurately while staying compliant with tax laws.
Consolidated Reporting
KoinX automatically gathers crypto transactions from 800+ platforms and creates a single report. This makes it easier for taxpayers to review high-value trades and match them with entries in their AIS without manual errors or omissions.
Error-Free AIS Reconciliation
By directly syncing with exchanges, KoinX ensures all high-value trades are captured. It highlights mismatches between reported income and AIS data, giving users a clear view of what needs correction before filing.
Automated Schedule VDA Preparation
High-value crypto trades must be properly shown in Schedule VDA. KoinX prepares this section with accuracy, ensuring that no transaction is missed and all details comply with Income Tax Department requirements.
Expert Notice Support
KoinX also assists users in handling tax notices related to high-value transactions. From identifying mismatches to preparing a structured response, the platform provides the guidance needed to resolve issues quickly and confidently.
Simplify your crypto tax journey with KoinX. Use KoinX today to track high-value transactions, reconcile AIS entries, and file error-free returns without the stress of manual reporting.
Conclusion
High-value transactions in AIS serve as a critical checkpoint for the Income Tax Department to identify mismatches and unreported income. Whether it is cash deposits, property purchases, or crypto trades, each flagged entry requires accurate reporting to avoid scrutiny. For taxpayers, staying aware of thresholds and keeping records updated is essential to remain compliant.
By reviewing AIS regularly and using platforms like KoinX, managing high-value crypto and financial transactions becomes easier and more reliable. Proactive action not only prevents penalties but also builds a strong foundation for transparent financial reporting. Take control of your tax obligations and join KoinX today to make crypto tax reporting simple, accurate, and stress-free.
Frequently Asked Questions
Can High-Value Transactions in AIS Affect Future Tax Audits?
Yes, flagged high-value transactions can increase the likelihood of being selected for future audits. The Income Tax Department uses these alerts to identify risk patterns, so maintaining clean records and clarifying mismatches reduces the chance of extended scrutiny in later years.
Do Small Crypto Traders Need To Worry About High-Value Flags?
Small crypto traders usually fall below reporting thresholds, but they should still review their AIS regularly. Even if the transactions are minor, occasional mismatches or unreported trades can trigger questions, so staying accurate with records helps avoid unnecessary stress.
How Does AIS Handle Joint Bank Accounts With High-Value Activity?
In joint bank accounts, transactions are reported against the PAN of the primary holder. However, all account holders may need to justify their share of funds if questioned. It is advisable to keep proper documentation showing contribution and usage for clarity.
Are Foreign Remittances for Family Support Considered High-Value Transactions?
Yes, foreign remittances above INR 10 lakh in a year are flagged under AIS, even if they are for family support. These transactions are not taxable in every case, but documentation showing the purpose and source of funds is essential to avoid confusion.
Can Business Expenses Paid Through Credit Cards Trigger AIS Alerts?
Yes, high-value credit card payments, even for business purposes, can be flagged if they exceed the prescribed limits. To prevent issues, businesses should ensure these payments are reflected in their tax filings and supported by proper accounting records.
