What is Section 285BA of the Income Tax Act?

Section 285BA requires banks, mutual funds, registrars, depositories and credit card issuers to file an annual Statement of Financial Transactions (SFT) reporting prescribed high-value transactions by their customers, which then appears in the customer's AIS and Form 26AS.

Is ITR filing mandatory if I deposit ₹10 lakh in my savings account?

Yes. Cash deposits aggregating ₹10 lakh or more in savings accounts during FY 2026-27 trigger the seventh proviso to Section 139(1), making ITR filing mandatory for that year regardless of whether your taxable income is below the basic exemption limit of ₹3 lakh.

What happens if AIS shows a transaction I did not make?

Log in to the e-filing portal, open the AIS, and submit feedback marking the entry as Information is not fully correct or Information relates to other PAN. The reporting entity is required to verify and correct it; meanwhile retain the feedback acknowledgment as evidence.

Can I be penalised for not reporting a high-value transaction?

You are not penalised for the transaction itself but for failing to file a return or for understating income. Late filing attracts a ₹5,000 fee under Section 234F, and unexplained credits can be taxed at 60% under Section 115BBE with surcharge, cess and a 10% additional penalty.

High Value Transactions

Under Section 285BA of the Income-tax Act, 1961, specified financial institutions must report transactions that cross prescribed thresholds directly to the CBDT. For FY 2026-27 and AY 2027-28, those reports flow into your Annual Information Statement (AIS) and Form 26AS as a live, PAN-linked ledger. If a flagged entry appears in your AIS but is unexplained in your return — or if you skip filing altogether — the department's risk engine will raise a notice. Understanding the thresholds, the mandatory filing triggers, and the reconciliation process is no longer optional.

What Counts as a High-Value Transaction Under Section 285BA

The reporting obligation rests with the financial institution — your bank, mutual fund house, or property registrar — not with you. But the tax consequences land squarely on your balance sheet. Rule 114E of the Income Tax Rules, 1962 lists the specified transactions (formally called SFT — Statement of Financial Transactions) that reporting entities must file in Form 61A by 31 May each year for the preceding financial year. For AY 2027-28, Form 61A for FY 2026-27 is due from reporting entities by 31 May 2027.

The thresholds that most commonly appear in an individual taxpayer's AIS are:

Banking and deposit transactions

Cash deposits aggregating ₹10 lakh or more in one or more savings accounts during the year
Cash deposits or withdrawals aggregating ₹50 lakh or more in one or more current accounts or cash credit accounts
Fixed deposits (other than renewals) opened or closed aggregating ₹10 lakh or more with a bank, cooperative bank, or post office

Payment instruments

Credit card bill payment in cash of ₹1 lakh or more in a year
Credit card bill payment by any other mode (online, cheque, NEFT) aggregating ₹10 lakh or more in a year

Property and capital market investments

Purchase or registration of immovable property valued at ₹30 lakh or more
Purchase or sale of shares, debentures, bonds, or mutual fund units aggregating ₹10 lakh or more through a company, institution, or fund house in a year

Foreign exchange

Sale of foreign currency — Forex cards, travellers' cheques, demand drafts — aggregating ₹10 lakh or more in a year through an authorised dealer

The Aggregation Trap

Each threshold is applied per reporting entity, per PAN, per financial year. If you deposit ₹9.5 lakh cash across two different banks' savings branches, neither bank individually crosses ₹10 lakh and neither files an SFT entry. But your AIS consolidates data from every reporting entity. The CBDT sees the aggregate picture across all institutions. Structuring transactions to stay below a single bank's reporting limit does not reduce your total AIS exposure — it may, however, attract additional scrutiny under Explanation 2 to Section 68 as a deliberate arrangement.

Who Reports to the CBDT?

Reporting entities under Section 285BA cover: scheduled commercial banks and cooperative banks, post offices, Nidhi companies, NBFCs accepting deposits, mutual fund Asset Management Companies (AMCs), companies issuing shares or debentures, registrars and sub-registrars (for property registrations), depositories (NSDL and CDSL), and authorised foreign exchange dealers. The penalty for a reporting entity that fails to file Form 61A on time is ₹500 per day under Section 271FA, giving these institutions a strong incentive to report promptly and completely.

The Mandatory ITR Filing Net: Seventh Proviso to Section 139(1)

Most taxpayers know that you must file a return if your gross total income exceeds the basic exemption limit. What catches people off guard is the seventh proviso to Section 139(1), which requires ITR filing for FY 2026-27 even if your income is below the basic exemption limit, if any one of the following conditions is satisfied:

You deposited ₹1 crore or more in aggregate in one or more current accounts during the year.
You incurred expenditure of ₹2 lakh or more on foreign travel — for yourself or any other person.
You incurred expenditure of ₹1 lakh or more on electricity consumption during the year.
Your business turnover or gross receipts exceeded ₹60 lakh.
Your gross receipts from a profession exceeded ₹10 lakh.
TDS and TCS deducted from or collected on your transactions aggregated ₹25,000 or more during the year (the threshold is ₹50,000 for resident senior citizens aged 75 or above).
You made aggregate deposits of ₹50 lakh or more in one or more savings bank accounts during the year.

Conditions 1, 2, 3, and 7 are purely activity-based. They carry no minimum income requirement and no age exemption. A retired schoolteacher aged 68 who deposits ₹52 lakh of property sale proceeds into a savings account must file an ITR for AY 2027-28 — irrespective of income level or tax payable.

Basic Exemption Limit for AY 2027-28

Under the old tax regime, the basic exemption limit is ₹2.5 lakh for individuals below 60 years; ₹3 lakh for senior citizens (60–79 years); and ₹5 lakh for super senior citizens (80 years and above). Under the new tax regime (the default regime from AY 2024-25 onwards), the basic exemption limit is ₹4 lakh as per Finance Act 2025, with a Section 87A rebate of up to ₹60,000 effectively making incomes up to ₹12 lakh tax-free — subject to notification for AY 2027-28. The seventh proviso mandatory filing obligation overrides both regimes. Filing is required regardless of the regime you select.

How AIS, TIS and Form 26AS Work Together for AY 2027-28

These three documents serve different but complementary purposes. Misreading one for another is a common cause of return errors.

Form 26AS is the foundational tax-credit register. It shows TDS deducted by employers, banks, and other deductors; TCS collected; advance tax paid; and self-assessment tax paid. From AY 2021-22, Part E of Form 26AS began incorporating SFT-reported transaction details. For AY 2027-28, treat Form 26AS primarily as your payment credit record and rely on AIS for transaction-level detail.

Annual Information Statement (AIS) is your 360-degree financial dossier as seen by the CBDT. It aggregates data from SFT reports filed in Form 61A, TDS and TCS returns filed by deductors, GST turnover reported under your linked GSTIN, import and export data from customs authorities, and foreign remittance details from Form 15CA/CB filings. The AIS is available at incometax.gov.in → AIS under your registered login. You can download it as a PDF for review or as a JSON file for detailed cross-checking. For AY 2027-28, expect AIS to be substantially populated by July 2027 as reporting entities complete their Form 61A filings.

Taxpayer Information Summary (TIS) is the processed, deduplicated version of AIS. It strips duplicate entries — for instance, the same interest income reported by both a bank (via TDS return) and the AIS — and shows a single processed value for each income category: salary, interest, dividend, capital gains, and so on. The ITR pre-fill utility at the e-filing portal draws values from TIS, not raw AIS. If your pre-filled ITR shows an income figure that looks inflated, the discrepancy almost always originates in a raw AIS entry that TIS has merged or attributed incorrectly.

How the Risk-Matching Engine Works

When you submit your ITR for AY 2027-28, the CBDT's Compliance Management System (CMS) compares every AIS line item against the income, deductions, and credits you have declared. A mismatch does not automatically trigger a full scrutiny notice under Section 143(2). The initial output is a Compliance Portal intimation — an online query asking you to confirm or dispute the reported transaction. You respond through the Compliance Portal at compliance.incometaxindiaefiling.gov.in. Only when you deny a transaction inconsistently with third-party data, or when you leave the portal query unanswered within 30 days, does the case escalate to the Assessing Officer (AO) for formal proceedings.

Step-by-Step: Reconciling Your AIS Before Filing

Begin this exercise no later than June 2027 — not in the last week before the 31 July 2027 due date. Two hours of structured work now prevents months of correspondence later.

Step 1 — Download the AIS. Log in to incometax.gov.in. Navigate to e-File → Income Tax Returns → Annual Information Statement. Download both the PDF (for reading) and the JSON (for detailed item-by-item checking).

Step 2 — Pull all bank statements. Gather April 2026 to March 2027 statements for every savings, current, and OD account linked to your PAN. Combine them into a single transaction ledger.

Step 3 — Match cash deposit entries. Identify every cash deposit (not NEFT/RTGS — those are non-cash) in your combined bank statements. Total them per bank. Cross-check against AIS. If the AIS figure for a particular bank is inflated, the most common causes are: cash deposits by third parties into your account, or a teller mis-tagging a cheque deposit as cash.

Step 4 — Verify FD and investment data. Compare AIS investment entries against your FD receipt slips, CDSL/NSDL Consolidated Account Statement (CAS), and MF-CAS from MF Central, CAMS, or KFintech. Renewal FDs should not appear as new SFT entries — confirm that no renewal has been mistakenly reported as a fresh deposit.

Step 5 — Reconcile property transactions. If you bought or sold immovable property in FY 2026-27, confirm the stamp-duty value and sale consideration both match your registered sale deed. The registrar files an SFT under Rule 114E for the full stamp-duty value. On joint purchases, the SFT may attribute the entire value to one PAN; verify whether the split is reflected correctly.

Step 6 — Submit AIS Feedback. Each AIS line item has a Feedback option in the portal interface. Select from: Information is correct / Information is not fully correct / Information relates to other PAN / Information is duplicate / Information is denied. Accepted feedback flows into TIS within a few days, and subsequently into the ITR pre-fill.

Step 7 — Retain physical documentation. AIS feedback is not conclusive evidence before an AO. Maintain the gift deed, loan agreement, sale agreement, dividend warrant, or property registration document that substantiates each flagged entry. An AO can call for documents within 30 days of issuing a notice.

Worked Example: When a Fixed Deposit and Credit Card Spend Trigger a Notice

Scenario: Priya is 52 years old, a homemaker in Delhi with no independent income. In May 2026, her husband transfers ₹12 lakh to her savings account by NEFT as household funds. She parks ₹11 lakh in a new FD with their bank in July 2026. She also uses an add-on credit card — all bills paid online — and the aggregate annual card spend for FY 2026-27 is ₹10.5 lakh. Priya has not filed an ITR in five years.

What appears in Priya's AIS for AY 2027-28:

Fixed deposit: ₹11 lakh — reported by the bank under Rule 114E since it exceeds the ₹10 lakh threshold (non-renewal FD)
Credit card payments (non-cash mode): ₹10.5 lakh — reported by the card issuer since it exceeds the ₹10 lakh threshold
Note: The ₹12 lakh NEFT transfer is not a cash deposit and does not independently trigger the savings account SFT threshold (which requires cash deposits); Priya's savings balance does not exceed ₹50 lakh, so the seventh proviso condition 7 is also not met

Compliance trigger: Both AIS entries appear, but no ITR is filed for AY 2027-28. The compliance engine issues an automated intimation on the Compliance Portal.

If Priya cannot document the source of the ₹11 lakh FD:

The AO may treat the FD as an unexplained credit under Section 68 or as unexplained money under Section 69A. Tax is levied at the flat rate under Section 115BBE:

Component	Basis	Amount (₹)
Tax @ 60% u/s 115BBE	60% × ₹11,00,000	6,60,000
Surcharge @ 25% on tax	25% × ₹6,60,000	1,65,000
Health & Education Cess @ 4%	4% × ₹8,25,000	33,000
Penalty u/s 271AAC @ 10% of tax	10% × ₹6,60,000	66,000
Total outflow
9,24,000

On an ₹11 lakh deposit, the total tax-and-penalty burden reaches ₹9,24,000 — approximately 84% of the original amount. Slab rates, deductions, and exemptions do not apply to income assessed under Section 115BBE.

What Priya should actually do: File the ITR for AY 2027-28 (the FD entry alone does not meet a seventh-proviso trigger, but professional review is warranted given the credit card spend). Submit AIS feedback confirming the FD entry is correct. Produce a contemporaneous gift letter — ideally executed on stamp paper at the time of transfer — confirming the ₹12 lakh NEFT from her husband was a family gift. Gifts between spouses attract the clubbing provisions of Section 64 for income arising from the gifted amount (interest on the FD will be clubbed with her husband's income), but the principal is not taxable as unexplained income once the source is documented. The interest on ₹11 lakh at, say, 7% p.a. for 8 months = approximately ₹51,333, which gets added to her husband's return — a small and entirely manageable consequence compared to ₹9.24 lakh in unexplained-income tax.

Penalties and Tax Consequences You Cannot Ignore

Section 234F — Late Filing Fee

If you file your ITR for AY 2027-28 after 31 July 2027 (the non-audit due date for individuals and HUFs not subject to tax audit):

₹5,000 if your total income exceeds ₹5 lakh
₹1,000 if your total income is ₹5 lakh or below

This fee is mandatory. An AO has no power to waive it. It is payable even if no tax is due. Belated returns may be filed up to 31 December 2027 for AY 2027-28. After that date, only a revised return (if an original return was filed) or a return under Section 119(2)(b) condonation route is available.

Sections 68 / 69A + Section 115BBE — The High-Stakes Path

When AIS entries cannot be explained:

Section 68 covers unexplained cash credits in your books of account
Section 69A covers unexplained money (cash, bullion, jewellery) found with you
Tax on such income is charged at a flat 60% under Section 115BBE — slab rates, Chapter VI-A deductions, and exemptions are all excluded
Surcharge: 25% on the tax = effective additional 15%
Cess: 4% on tax plus surcharge
Penalty: 10% of tax under Section 271AAC, applicable when the income is not included in the original return
Combined effective burden: approximately 78–84%

Prosecution Under Section 276CC

For large unexplained deposits — typically above ₹25 lakh — combined with wilful non-filing, the department may initiate prosecution under Section 276CC. The provision allows for rigorous imprisonment of 3 months to 2 years (extendable to 7 years where the tax evaded exceeds ₹25 lakh). Such proceedings are reserved for egregious cases, but the expanding AIS data trail has made identification significantly easier than it was even five years ago.

Common Mistakes — and How to Fix Them

Mistake 1: Assuming below-the-limit income means no filing obligation. Check the seventh proviso checklist before concluding you need not file. A savings deposit above ₹50 lakh, foreign travel above ₹2 lakh, or TDS above ₹25,000 each independently require an ITR — regardless of income level.

Mistake 2: Not checking AIS for every family member who has a PAN. SFT entries for joint accounts may be reported under the first account holder's PAN. Download and review the AIS for every adult family member with an active PAN. A senior parent may have an SFT entry they are completely unaware of.

Mistake 3: Relying solely on TIS without reviewing raw AIS. TIS deduplicates and consolidates, but it occasionally merges entries incorrectly or misclassifies a transaction. A renewal FD may be stripped out in TIS but remain in raw AIS as an apparent new deposit. Always compare both documents before filing.

Mistake 4: Believing AIS feedback is legally conclusive. Submitting feedback updates TIS and the ITR pre-fill. It does not bind the AO if proceedings are initiated. You must produce supporting documents — a feedback entry carries no evidentiary weight on its own.

Mistake 5: Leaving the Compliance Portal unmonitored. The Compliance Portal at compliance.incometaxindiaefiling.gov.in is a separate interface from the main e-filing portal and many taxpayers never log in to it. Check it from June through December of the assessment year. An unanswered intimation is treated as a denial and escalates automatically.

Mistake 6: Documenting intra-family transfers retrospectively. Transfers between spouses and from parents to adult children are routine, but a gift letter or loan agreement produced after a notice arrives carries far less weight than one executed at the time of the transfer. Create a dated, signed record — and preferably a registered gift deed for amounts above ₹5 lakh — at the moment of every large intra-family movement.

Mistake 7: Ignoring property SFT discrepancies. On joint property purchases, the registrar may report the entire stamp-duty value against one PAN. If only one co-owner reflects the full consideration in their return, the other's AIS shows a mismatch. Confirm the split on your AIS and file accordingly, disclosing your proportionate share.

Key Takeaways

Section 285BA places the reporting duty on banks, mutual funds, registrars, and card companies — but the tax consequences for unexplained entries sit entirely with you. You cannot shift responsibility to the reporting entity.
Know the six most common SFT thresholds cold: ₹10 lakh for savings FDs and MF investments; ₹50 lakh for current-account cash movement; ₹30 lakh for property purchases; ₹10 lakh for credit card spend by non-cash mode; ₹10 lakh for foreign exchange sales; ₹10 lakh for share and bond transactions.
The seventh proviso to Section 139(1) mandates ITR filing for AY 2027-28 even if income is below the basic exemption limit when you cross any of the seven specified triggers — particularly savings deposits above ₹50 lakh or foreign travel above ₹2 lakh.
AIS is your primary reconciliation document. Download it well before 31 July 2027, submit feedback on incorrect or duplicate entries, and maintain source documents (gift letters, loan agreements, sale deeds, FD receipts) to substantiate every flagged line.
Unexplained SFT entries can attract an effective tax-and-penalty burden of 78–84% under Sections 69A, 115BBE, and 271AAC — materially worse than any slab-rate scenario, with no deductions available.
The Compliance Portal is separate from the main e-filing portal. Check it regularly from June through December of each assessment year; unaddressed intimations escalate to formal proceedings without further warning.
Document intra-family transfers at the time they occur. A contemporaneous signed gift letter or loan memorandum is exponentially more persuasive before an AO than documentation assembled after a notice arrives.

High Value Transactions