I-T Cracks Down on Entities Failing to Report High-Value Deals

The Income Tax Department has intensified its surveillance on companies, institutions, and intermediaries that fail to report high-value financial transactions. This move is part of a broader compliance push aimed at curbing tax evasion and ensuring better transparency in financial reporting.

What Triggered the Crackdown?

Under the Statement of Financial Transactions (SFT) framework, banks, mutual funds, property registrars, and other specified entities are required to report certain transactions exceeding prescribed thresholds — such as:

• Cash deposits or withdrawals above ₹10 lakh
• Credit card payments exceeding ₹10 lakh in a financial year
• Purchase or sale of immovable property valued at ₹30 lakh or more
• Investment in mutual funds, bonds, or shares above ₹10 lakh

Recent data analytics by the Central Board of Direct Taxes (CBDT) revealed that several entities either failed to file SFT reports or filed incomplete information, causing gaps in the tax department’s data tracking system.

Department’s Action Plan

The Income Tax Department has begun issuing notices and show-cause letters to non-compliant entities. Those failing to justify the delay or non-reporting could face:

• Penalties under Section 271FA, ranging from ₹500 to ₹1,000 per day of default
• Further scrutiny and audits for the responsible organizations
• Possible prosecution or blacklisting for repeated non-compliance

The department is also cross-verifying financial data using AI-driven analytics and PAN-linked transactions to identify unreported high-value activities.

How It Affects Taxpayers

If an institution fails to report your high-value transaction, it may cause a mismatch in your Form 26AS or AIS (Annual Information Statement). This can lead to unnecessary scrutiny or delays during ITR processing.
Taxpayers are advised to:

• Regularly check their AIS and 26AS
• Report all major transactions honestly in their ITR
• Ensure their PAN and Aadhaar are correctly linked across financial accounts

Government’s Message: Transparency is Non-Negotiable

The crackdown signals the government’s commitment to building a compliance-oriented ecosystem. With advanced data analytics and interlinked databases, evasion through non-reporting is becoming increasingly difficult.

As the digital economy grows, taxpayers and institutions alike are expected to maintain full disclosure and timely reporting to avoid penalties and ensure smooth compliance with the law.

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FAQs

1. What is an SFT report?
The Statement of Financial Transactions (SFT) is a report filed by specified institutions to inform the Income Tax Department about high-value transactions conducted during the financial year.

2. Who needs to file SFT reports?
Banks, mutual fund companies, registrars/sub-registrars, NBFCs, and credit card issuers, among others, must file SFTs for transactions above threshold limits.

3. What is the penalty for failing to file SFT?
Under Section 271FA, a penalty of ₹500 per day applies for delayed filing. If an entity continues to ignore notices, the penalty increases to ₹1,000 per day.

4. How can taxpayers verify their reported transactions?
You can check your Form 26AS and Annual Information Statement (AIS) on the Income Tax e-filing portal to verify if your transactions are correctly reported.

5. What should I do if a transaction is missing in my AIS?
You can raise a feedback request directly in the AIS portal to notify the department and ensure the record is corrected.