Home > Income Tax > Help Center > High Value Transactions under SFTLast Updated: Aug 22nd 2024
High value transaction limits for Income Tax Compliance
Part of new Income Tax Reforms 2020 in India, Honourable Indian Prime Minister Mr. Narendra Modi launched a new initiative to capture all the High Value Transactions (SFT) by the income tax department to widen the tax base in India. This document covers Specified Financial Transactions (SFT) and the minimum transaction limits
This document covers
- Why to capture the Specified Financial Transactions ?
- Newly added High Value Transactions threshold limits
- Existing High Value Transactions threshold limits
- Other Limits added to enforce IT Filing
- How to know high value transactions recorded for your PAN?
- How to handle e-Campaign SMS, High Value Transaction Notices?
1. Why to capture the Specified Financial Transactions ?
While the Income Tax Return Filings have increased YOY for the last 2+ years, the income tax compliance in India is not where it is supposed to be compared to other countries in certain parameters.
The main segment of individual IT Return Filings are from the employees of both private, public sector. To widen tax base, government of India took the initiative to capture the specified financial transactions of certain limits to make sure that the taxpayer is aware and comply.
The series of direct tax reforms in India are much needed to regain the confidence from the honest taxpayers mainly the working-class population.
“It is a win-win for both honest taxpayers and the government where the initiative not only ease the compliance but expected to add more taxpayers to the formal economy and collect more taxes.”
2. Newly added High Value Transactions threshold limits
| # | Transaction Type | Min. Amount (Rs.) |
| 1 | Payment to Hotels | 20,000 |
| 2 | Payment of Property tax per annum | 20,000 |
| 3 | Health Insurance premium | 20,000 |
| 4 | Life Insurance Premium | 50,000 |
| 5 | Payment of educational fee / donations | 1 Lakh |
| 6 | Electricity Consumption per year | 1 Lakh |
| 7 | Purchase of jewellery, white goods, painting, marble, etc | 1 Lakh |
| 8 | Share transactions in DMAT Accounts / Bank Lockers | any |
| 9 | Domestic class Air travel / Foreign travel | any |
| 10 | Deposit / Credits in non-current Accounts | 25 Lakhs |
| 11 | Deposit / Credits in Current Accounts | 50 Lakhs |
Income tax department (ITD) doesn’t want you to do some transactions in Cash beyond a specific limit. Section 269ST was introduced by the Finance Act 2017 to restrict cash transactions and to promote digital economy. No Person should accept cash if the amount is Rs 2,00,000 or more as per Section 269ST.
2.1. Mode of undertaking transactions
As per Section 269ST, No person should receive an amount of Rs 2,00,000 or more except by account payee cheque/account payee draft/ECS through bank account/ such other prescribed electronic mode in
- In aggregate from a person in a day or
- in respect of a single transaction
- in respect of transactions relating to one event or occasion from a person
Shiva Enterprises sold goods to Mr Rama on 31/01/2022 and 15/01/2022 for Rs 1,50,000 and Rs 3,00,000 through 2 different invoices. Can Shiva Enterprises take the entire Rs 4,50,000 in cash?
Ans: No, as the aggregate amount is exceeding Rs 2,00,000 from a person in a day, Shiva Enterprises should not take the entire Rs 4,50,000 from Mr Rama. However, Shiva enterprises can take the amount from different persons for less than 2 lakhs
Seetha has provided interior decoration service of Rs 5,00,000 to her client Ram. Now Ram wants to pay Rs 5,00,000 in 10 instalments of Rs 50,000 each in cash. Can Seetha accept the amount in cash?
Ans: Seetha should not accept the amount in cash as it is more than 2,00,000 and it relates to a single transaction
Krishna has received Rs 1,50,000 cash on the occasion of engagement and Rs 1,20,000 cash on the occasion of his marriage from his grandfather. Krishna should not accept the same in cash as the total amount is exceeding Rs 2,00,000 from same person
Note 1: Prescribed modes of electronic payment means credit card, debit card, net banking, IMPS, UPI, RTGS, NEFT, BHIM.
Note 2: For NBFC and HFC, the receipt of one instalment of loan repayment in respect of loan given shall be considered for the limit of Rs 2,00,000 or more. All the instalments paid for a loan should not be aggregated for this purpose
2.2. Penalty
The penalty for contravening the provisions of Section 269ST i.e, taking cash of Rs 2,00,000 or more is 100% of the total amount received
2.3. Non-Applicability of section 269ST
The limit of accepting cash 2,00,000 or more is not applicable to following persons
- Any receipt by Government, banking company, post office savings bank or co-operative bank
- Transactions of the nature referred in section 269SS i.e., accepting certain loans, deposits o specified sum
- Such other persons or class of persons or receipts notified by Central Government
3. Existing High Value Transactions threshold limits
| # | Transaction Type | Min. Amount (Rs.) |
| 1 | Cash Deposit in Savings Account | 10 Lakhs |
| 2 | Cash Deposit or Withdrawal from one or more Current Accounts | 50 Lakhs |
| 3 | Term Deposits | 10 Lakhs |
| 4 | Purchase or Sale of Immovable Property (House, Land, Apartment etc.) | 30 Lakhs |
| 5 | Receipt of Cash for the Sale of Goods / Services | 2 Lakhs |
| 6 | Cash Payment for Bank Demand Drafts / Challans | 10 Lakhs |
| 7 | Purchase of Shares / Mutual Funds / Bonds / Debentures | 10 Lakhs |
| 8 | Purchase of Foreign Currency | 10 Lakhs |
| 9 | Credit Card Payment in Cash | 1 Lakh |
| 10 | Credit Card payment in any mode other than cash | 10 Lakhs |
4. Other Limits added to enforce IT Filing
- Provision for the Deduction / Collection of tax at higher rates for no-filers of tax returns
- Provision for making Tax Returns Compulsory for taxpayers
- Whose bank transactions above Rs. 30 Lakh
- All professionals, businesses having turnover above Rs. 50 Lakh
- All whose payment of rent is above Rs. 40,000 per month
5. How to know high value transactions recorded for your PAN?
Income Tax Department collects the high value transactions from various sources and record against every PAN (permanent account number). You can check what transactions were identified against your PAN using Form 26AS or AIS (Annual Information Statement) statement.
Form 26AS is a TDS Credit statement, an important document when filing your taxes. Check @ How to View / Download Form 26AS ?
AIS is a comprehensive statement containing details of the financial transactions undertaken by you for a given financial year (FY). Different from Form 26AS. Check @ How to View / Download AIS Statement ?
If you are traveling abroad, if you are not compliant in taxes, you may need to get the Income Tax Clearance Certificate (ITCC) In India.
Refer Who needs a Tax Clearance Certificate in India?
6. How to handle e-Campaign SMS, High Value Transaction Notices?
Starting from 2022, IT Department started sending e-Campaign SMS alerts, and High Value Transaction Notices. Refer Handling e-Campaign SMS, High Value Transaction Notices
