Want to stay off the income tax radar? Expert says never cross these limits then

It all started with a vacation plan. Rohit, a 29-year-old marketing executive from Pune, had saved diligently for a dream European trip. Flights? Business class. Hotels? Five-star. His expenses touched nearly Rs 12 lakh in just two weeks. But what he didn’t expect was a surprise—a notice from the Income Tax Department landing in his inbox just days after returning.

Why? He had unknowingly triggered one of the department’s many red flags.

“Most people don’t realise everyday financial actions can get reported to the tax authorities,” says CA Nitin Kaushik, a seasoned tax expert. “But if they cross certain thresholds—even without any wrongdoing—they may receive a tax notice.”

These thresholds are monitored under Specified Financial Transactions (SFT) reporting rules, and institutions like banks, mutual funds, and credit card companies are required to report them. If you go over the limit, the tax department gets alerted automatically.

Here’s what every taxpayer must know:

Transactions that can trigger an I-T Notice:

Cash deposit in savings account: Rs 10 lakh/year

Cash deposit in current account: Rs 50 lakh/year

Credit card bill paid in cash: Rs 1 lakh/year

Total credit card bill paid (any mode): Rs 10 lakh/year

Purchase/sale of immovable property: Rs 30 lakh+ or higher if stamp duty value is involved

Investment in FDs: Rs 10 lakh/year

Investment in shares, bonds, mutual funds, debentures: Rs 10 lakh/year (per institution)

Foreign travel or forex purchases: Rs 10 lakh/year

Cash gift received (from non-relatives): Rs 50,000 (above this, taxable)

Cash received from any person in a single day: Rs 2 lakh (penalty under Section 269ST)

Rohit’s foreign travel bill and mutual fund SIPs, combined with a cash gift from a distant cousin for his birthday, had all been reported. Since he didn’t reflect some of these in his ITR, a mismatch was flagged, leading to the dreaded notice.

Got a notice? Here’s what to do

Step 1: Don’t panic—and don’t ignore it. Every notice has a response deadline. Delays can mean fines or reassessment.

Step 2: Log in to the Income Tax Portal and verify the notice using its Document Identification Number (DIN).

Step 3: Read carefully to see which section it’s under—common ones include Section 143(1) for adjustments or 148 for reassessment.

Step 4: Gather all relevant documents: Form 16, ITR copies, bank statements, investment proofs, etc.

Step 5: Submit a clear, fact-based response through the e-filing portal and retain a copy of your reply.

If the issue isn’t resolved to your satisfaction, consider options like:

Rectification under Section 154

Appeal to the Commissioner (Appeals)

Revision under Section 264

You don’t need to be doing anything shady to get noticed. Just crossing a reporting threshold without filing correctly is enough. But knowledge is power. By understanding these limits, keeping records, and filing accurately, you can stay off the IT radar and enjoy financial freedom, just like Rohit hopes to, on his next (better-planned) trip.