Key Cash Transactions the Income Tax Department Is Watching in 2025

The Income Tax Department has significantly increased its focus on high-value cash transactions to prevent tax fraud and money laundering.

Financial institutions such as banks, real estate agents, mutual fund firms, and stock brokers are mandated to report any substantial cash dealings.

Neglecting to comply with these reporting requirements can lead to serious legal implications.

Here’s an overview of the transactions that fall under the radar of the tax authorities.

Key Transactions Monitored by Tax Authorities

The Income Tax Department keeps a close eye on several cash-related transactions, especially those involving large sums of money.

The list of transactions that attract attention includes real estate acquisitions, investments in various securities, and large cash movements in personal accounts. Below, we summarize the types of transactions that are carefully scrutinized.

1. Property Purchases

In compliance with the Prevention of Money Laundering Act (PMLA), property registrars must report any sale or purchase of real estate valued above ₹30 lakh. This rule applies whether the transaction is conducted in cash or other forms of payment.

Reportable Details:

• Names and contact details of both the buyer and seller
• Transaction date and property specifics (location, type)
• Sale or purchase price

This enables the authorities to track substantial cash flows in real estate, mitigating the risk of illegal activities like tax evasion.

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2. Investing in Stocks and Bonds

When buying stocks, bonds, mutual funds, or debentures, any purchase worth ₹10 lakh or more must be disclosed by the issuer of the financial instruments. This ensures that all investments are transparent and that no income is being hidden through such channels.

Information Shared:

• Investor’s name and PAN (if available)
• Investment amount and type of securities
• Transaction date

This helps authorities spot individuals or firms hiding income or engaging in suspicious financial practices.

3. Foreign Currency Transactions

Any purchase of foreign exchange exceeding ₹10 lakh in a financial year must be reported. This includes transactions such as purchasing foreign currency notes, travellers’ cheques, and payments made via credit or debit cards for foreign currency purchases.

Transactions Covered:

• Foreign currency notes and coins
• Traveller’s cheques and forex cards
• Debit/credit card payments for foreign exchange

These measures allow the tax department to detect taxpayers who might be misreporting their income or engaging in suspicious foreign exchange dealings.

4. Large Cash Deposits in Bank Accounts

Banks and cooperative banks are obligated to notify the tax authorities if a person deposits ₹10 lakh or more in cash across one or more accounts during a financial year, excluding current and time deposits.

Required Data:

• Name, address, and PAN (if applicable) of the depositor
• Deposit date and cash amount
• Account number(s) involved

Such transactions are monitored to detect any underreporting of income or unusual patterns of cash handling.

5. Fixed Deposits

Deposits into fixed deposit accounts amounting to ₹10 lakh or more within a year must be reported to the Central Board of Direct Taxes (CBDT). This rule applies to new or existing deposits, but it excludes renewals.

Reporting Criteria:

• Depositor’s name, address, and PAN (if applicable)
• Deposit amount and the date it was made
• Account details

6. Payments for Credit Cards

Payments made towards credit card balances that total ₹1 lakh or more in cash must be reported. Furthermore, if the total credit card payments in a year exceed ₹10 lakh, these also need to be disclosed by the credit card issuers.

Reporting Details:

• Cardholder’s name and contact information
• Payment amount and the method of payment (e.g., cash, cheque, or NEFT)
• Payment date

This rule helps prevent underreporting and identifies suspicious financial activities.

Quick Reference 

Transaction Type	Threshold	Who Reports
Real Estate Transactions	₹30 lakh or more	Property registrars
Investments in Stocks & Bonds	₹10 lakh or more	Issuing institutions
Foreign Currency Transactions	₹10 lakh or more	Foreign exchange service providers
Cash Deposits in Banks	₹10 lakh or more	Banks/cooperative banks
Fixed Deposit Deposits	₹10 lakh or more	Banks
Credit Card Payments (cash)	₹1 lakh or more	Credit card issuers

Conclusion

The Income Tax Department has enforced these rigorous reporting guidelines to ensure transparency in financial transactions and prevent tax fraud. By carefully monitoring these large transactions, the authorities can uncover illegal financial activities and ensure that all individuals and entities remain compliant with the tax laws. It’s important to stay aware of these regulations to avoid unnecessary legal complications.

People May Ask

Which real estate transactions need to be reported to the Income Tax Department?

Any real estate transaction exceeding ₹30 lakh, whether paid in cash or otherwise, must be reported by the property registrar.

What types of investments require reporting if they exceed ₹10 lakh?

Any purchase of stocks, bonds, mutual funds, or debentures amounting to ₹10 lakh or more must be disclosed by the financial institution or issuer.

Do foreign currency transactions need to be reported?

Yes, any foreign exchange transaction exceeding ₹10 lakh, including purchases made via debit/credit cards, must be reported.

What happens if I make large cash deposits in my bank account?

If your total cash deposits across accounts exceed ₹10 lakh in a year, the bank is required to notify the tax authorities.

Are fixed deposits also monitored by the Income Tax Department?

Yes, any individual who deposits ₹10 lakh or more in fixed deposits during a financial year must have these transactions reported to the tax authorities.