Income Tax High‑Value Transactions in India: Meaning and How to Respond

In India, a high-value transaction is any financial activity exceeding specific monetary thresholds, flagged automatically by financial institutions to the Income Tax Department. Responding involves the e-campaign compliance portal, as well as a Preliminary Response. This blog explains their meaning with examples and guides you on how to respond to a high-value transaction notice.

What Are Income Tax High-Value Transactions?

High‑value transactions refer to specific financial activities involving large amounts of money, reported to the Income Tax Department under the Annual Information Return (AIR) system. They are flagged since they cross the thresholds set by The Central Board of Direct Taxes (CBDT), created to track substantial monetary movements and ensure tax compliance.

The Income Tax Department uses this information to cross‑verify your income tax returns. If your declared income appears insufficient to support your spending, you may receive a notice under Section 133(6) or Section 142(1) asking for clarification.

For instance, if you’ve reported an annual income of ₹8 lakh but purchased a property worth ₹50 lakh, the department will seek an explanation regarding the source of funds. This doesn’t automatically mean you’ve done something wrong; it simply triggers a verification.

Also Read: Effective Tax Rate: Meaning, Calculation and Examples

Key Thresholds for High-Value Transactions

Here’s a table of main thresholds that financial institutions report:

Also Read: Section 80G 80GGA Deductions: Eligible Donations, Limits & Tax Rules

How to Respond to High-Value Transaction Notices

Notices arrive via email or the e-filing portal if AIS shows mismatches, like a ₹35 lakh property sale not matching your ITR. Responding involves the e-campaign platform and a preliminary response.

E-Campaign for Voluntary Compliance

This user-friendly platform enables you to submit your responses online, helping you provide clarity and avoid an income tax notice. Here is a step-by-step guide to respond:

1. Log into the Income Tax website using your PAN.
2. Check your transaction status by clicking the ‘Pending Actions’ button, then on ‘Compliance Portal’, and finally on ‘E-Campaign’.
3. This takes you to the e-campaign portal landing page, where you can click the relevant e-campaign and then on ‘Provide feedback in AIS’.
4. From the list of categories, look for the “e” (expected) mark against the one for which you have received the intimation.
5. Choose the appropriate response from the dropdown:
   • Information is correct
   • Information is not fully correct
   • Income is not taxable
   • Information relates to other PAN/year
   • Information is duplicate/included in other displayed information
   • Information is denied

Preliminary Response

The next step is to submit responses to relevant questions under the ‘Preliminary Response’ section:

1. Click on the ‘Provide Response’ button in the ‘Preliminary Response’ section.
2. Select the relevant drop-down and provide all required details.
3. Submit the response once done. Use the ‘Activity History’ screen to download the preliminary response.

Also Read: A Guide to Basic Concepts of Income Tax

To Conclude

High-value transactions like ₹10 lakh bank deposits or ₹30 lakh property deals are routine reports to match your financial activity with ITRs. Respond via the compliance portal with proofs for quick resolution.

FAQs

What triggers a high-value transaction notice?

Notices trigger when SFT (Statement of Financial Transaction)-reported activities, like cash deposits over ₹10 lakh or property sales above ₹30 lakh, mismatch your declared income in AIS or ITR.

What if the flagged transaction is incorrect?

If the transaction you’ve been notified about is incorrect, select “Information is incorrect” in the portal, upload proofs like bank statements to verify the same, and explain the discrepancy.

Will responding to a high-value transaction notice trigger a CIBIL score check or loan eligibility?

No, high-value transaction notices and your responses are strictly between you and the Income Tax Department. They are not reported to credit bureaus like CIBIL and won’t trigger a CIBIL score check.

Do high-value transactions change my income tax rates?

No, high-value transactions don’t automatically change your tax rate. Income tax rates are based on total annual income as per the tax slabs (0%, 5%, 10%, 20%, or 30%). However, if the tax department finds that your transactions don’t match your declared income and adds unexplained amounts to it, your total taxable income increases; this could push you into a higher tax bracket.