Income Tax AIS / SFT High-Value Transaction Notice
Last reviewed: March 2025 · Sourced from official government portals
THE DEPARTMENT HAS YOUR TRANSACTION DATA AND IS ASKING ABOUT IT
The income tax department now receives detailed financial information about you from dozens of sources: banks, stock exchanges, mutual fund houses, property registrars, foreign exchange dealers, insurance companies, and more. This data flows through two systems: the Annual Information Statement (AIS) and the Statement of Financial Transactions (SFT / Form 61A).
When a transaction appears in your AIS and does not show up in your filed income tax return - or the income tax return shows much lower income than the transaction data suggests - the department sends you a communication asking for an explanation.
Source: Section 285BA, Income Tax Act, 1961 (SFT obligations of reporting entities). AIS launched 2021 as an expansion of Form 26AS.
WHAT KIND OF TRANSACTIONS GET REPORTED
Under SFT rules, these entities are required to report high-value transactions to the income tax department:
- •Banks: Cash deposits of Rs. 10 lakh or more in savings accounts; Rs. 50 lakh or more in current accounts in a financial year
- •Credit card companies: Payments of Rs. 1 lakh or more in cash, or Rs. 10 lakh or more in aggregate against credit card bills
- •Mutual fund houses: Investments of Rs. 10 lakh or more in mutual fund units
- •Stockbrokers / NSE / BSE: Share transactions totalling Rs. 10 lakh or more
- •Property registrars: Sale or purchase of immovable property of Rs. 30 lakh or more
- •Foreign exchange dealers / FFMC: Foreign currency transactions (outward remittances, forex purchases) of Rs. 10 lakh or more
- •LIC and other insurers: Receipt of cash payment of Rs. 10 lakh or more as premium
- •NBFCs and cooperative banks: Fixed deposit receipts of Rs. 10 lakh or more
Every transaction above these thresholds appears in your AIS - linked to your PAN. The data is available to both you and the income tax department.
HOW TO RESPOND
Your response depends on the nature of the transaction and whether it was correctly reflected in your ITR:
- •Transaction was correctly reported in your ITR: Simply provide the reference - the schedule, amount, and treatment in your return. The matter typically closes here.
- •Transaction was not reported because it is not taxable income: Explain and document. Examples: a loan receipt (not income), sale of shares at a loss, gift received from relatives, proceeds from selling household goods.
- •Transaction was taxable and was not reported: The most uncomfortable situation. You will need to assess whether to file a revised return (if within the deadline) or a belated return, and pay tax with interest. Proactive disclosure is almost always better than waiting for a formal demand.
- •Transaction data in AIS is wrong: This happens. Banks and other entities sometimes file SFT data incorrectly. You can submit a response on the AIS/26AS portal flagging the transaction as incorrect, with documentary evidence.
THE FORMAL NOTICE THAT FOLLOWS
If you do not respond to the initial AIS communication or if your response is not satisfactory, the department will typically issue a formal notice under Section 133(6) (asking for information from you), Section 142(1) (during ongoing scrutiny), or trigger a reassessment under Section 148A.
Responding proactively to AIS communications - before they become formal notices - is significantly less expensive and stressful than dealing with formal proceedings later.
Frequently Asked Questions
My AIS shows a property sale that I do not recognise. Someone else's transaction appears against my PAN. What do I do?
This happens when a property registrar files SFT data with an incorrect PAN. First, verify that the transaction is genuinely not yours by checking the property address and details. Then submit an online feedback/objection on the AIS portal marking the transaction as "information is incorrect." Also raise a grievance on the income tax portal. Keep a record of all correspondence.
My AIS shows Rs. 35 lakh in mutual fund redemptions. I reported the capital gains but not the gross redemption amount. Will I get a notice?
Possibly. The AIS shows gross transaction value while your ITR shows net capital gains. The difference can look like unreported income to an automated system. If you receive a communication, simply explain this in your response with your ITR Schedule CG (capital gains) showing the purchase price, sale price, and gains computed. This is a common and easily explained discrepancy.
Book this service on Ollvy
Business ITR Filing
Want to do it yourself?
Helpful tools
Related guides
Income Tax Section 148 / 148A Notice: Reopening of Assessment
Income Tax Notice · Last reviewed March 2025
Income Tax Section 143(2) Scrutiny Notice: A Human is Reviewing Your Return
Income Tax Notice · Last reviewed March 2025
Income Tax Section 142(1) Notice: What the Department is Asking For
Income Tax Notice · Last reviewed March 2025