The Income Tax Department will now keep a special watch on individuals who file income tax returns but fail to disclose high-value transactions. Likewise, those who deduct TDS (Tax Deducted at Source) but do not deposit the deducted tax will also be under scrutiny. This year, these two aspects will be a focus area for return assessment to prevent tax evasion.
It has been observed that individuals incurring large expenses often hide their actual income. To tackle this, the Income Tax Department will use data analytics. If substantial transactions have occurred in a bank account but are not disclosed in the return, the department will detect them using advanced data analytics systems.
High-value transactions include large property deals and significant cash deposits. Similarly, returns of those making large credit card payments will also be monitored. Banks and financial institutions are mandated to report such high-value financial transactions by May 31.
This includes:
Deposits exceeding ₹50 lakh
Property purchases over ₹30 lakh
The department aims to identify taxpayers who declare lower income despite incurring heavy expenses. It will utilise information from financial institutions to the fullest and seek their cooperation. The department will gather data from banks, post offices, cooperative institutions, fintech companies, and mutual funds by tracking accounts showing unusual activity.
To monitor large cash transactions, the Income Tax Department has implemented a TDS deduction system. If an account holder withdraws more than ₹1 crore in cash from their account, they are required to pay 2% TDS. Non-filers or those who intentionally conceal income will also fall under this system.
