Income Tax Alert: These 6 Financial Moves Can Land You A Notice.

Filing your Income Tax Returns (ITR) on time is just one part of staying tax-compliant. Now the Income Tax Department is using Artificial Intelligence (AI) and data analytics to monitor financial behaviour, even routine transactions could catch their attention if they appear suspicious or are not properly disclosed.

From high-value deposits to luxury purchases, here’s a simplified breakdown of common transactions that might invite a tax notice—and how you can avoid trouble by staying transparent and organised.

Depositing over ₹10 lakh in a savings account in one financial year can raise red flags. The IT department matches these deposits with your reported income. If there’s a mismatch, you may be asked to explain the source of funds.

Always maintain a clear paper trail, salary slips, business receipts, or gift deeds, especially for large transfers.

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Buying or selling property valued at ₹30 lakh or more is automatically reported to the tax department through the SFT (Statement of Financial Transactions). Any mismatch between property values and income declared can result in scrutiny.

Fixed deposits over ₹10 lakh in a year are also reported by banks. If you don’t show sufficient income to support these investments, a notice could follow.

Make sure you declare interest earned from FDS in your ITR, and link the investment back to known income sources.

Paying more than ₹1 lakh in cash towards credit card dues in a year might prompt questions about your cash flow. The IT department sees such behaviour as a potential sign of unaccounted income.

Use digital or banking channels whenever possible. They leave a clean audit trail that supports your financial transparency.

Foreign trips are fun, until they lead to tax queries. Buying foreign currency or travel cards worth ₹10 lakh or more in a year is tracked.

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You have to disclose the purpose and source of funds in your ITR. Even educational or business travel should be supported by proper documentation.

Investing over ₹10 lakh in mutual funds, bonds, or debentures in a financial year is also a flagged transaction.

It is mandatory to match your investments with declared income and maintain proper KYC and PAN-linked documents.

The Income Tax Department is increasingly relying on machine learning models to assess tax filings, predict possible non-compliance, and conduct automated, risk-based audits—all aimed at reducing manual checks.

These advanced tools are designed to analyse large volumes of data, spot patterns, and flag any significant discrepancies in income declarations, claimed deductions, or reported sources of income. Such mismatches often point to under-reporting or potential tax evasion.