📌 Key Takeaway: Understand Annual Information Statement (AIS) SFT reporting thresholds for cash deposits (₹10L in savings, ₹50L in current accounts) and Section 68 scrutiny.
How Banks Report Cash Transactions: SFT Framework
Under Section 285BA of the Income Tax Act read with Rule 114E, banks and financial institutions must furnish a Statement of Financial Transactions (SFT) reporting high-value cash deposits and withdrawals directly to the Income Tax Department.
Mandatory SFT Thresholds for Banks
- Savings Bank Accounts: Cash deposits or withdrawals aggregating to ₹10 Lakhs or more in a financial year across one or more accounts.
- Current Accounts: Cash deposits or withdrawals aggregating to ₹50 Lakhs or more in a financial year.
- Fixed Deposits (FD): Cash deposits for opening FDs aggregating to ₹10 Lakhs or more.
- Credit Card Payments: Cash payments exceeding ₹1 Lakh or banking transfers exceeding ₹10 Lakhs.
Preventing Section 68 / 69A Tax Scrutiny Notices
If reported SFT transactions exceed the turnover declared in your filed ITR, CPC triggers automated high-value cash notices. Maintain documented cash ledgers explaining the commercial source (counter retail sales, agricultural proceeds) and report turnover under Section 44AD.