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India notified the Income-tax Rules, 2026, with effect from 1 April 2026, but the biggest point for taxpayers is often misunderstood: the tax system mostly uses reporting thresholds, not blanket banking caps.
According to the Income Tax Department, the Statement of Financial Transaction, or SFT, is a ‘reporting mechanism’ through which taxpayers disclose ‘material financial transactions’ to the department in Form 61A. Those filings are generally due by 31 May after the end of the financial year, and the data also feeds into the taxpayer’s Annual Information Statement, or AIS.
The SFT triggers remain highly data-driven. Banks must report cash deposits or cash withdrawals of Rs. 50 lakh or more in one or more current accounts during a financial year. For accounts other than current accounts and time deposits, including ordinary savings-type accounts, cash deposits of Rs. 10 lakh or more are reportable.
Time deposits of Rs. 10 lakh or more, credit-card bill payments of Rs. 1 lakh or more in cash or Rs. 10 lakh or more by other modes, and property transactions of Rs. 30 lakh or more are also reportable.
Beyond banking, a tax-audited business must report cash receipts above Rs. 2 lakh for the sale of goods or services if that transaction is not already covered elsewhere.
Tax compliance is increasingly tracked through PAN. The Department says PAN helps it link tax payments, TDS/TCS credits, returns, and ‘specified transactions.’ PAN is already mandatory for opening most bank accounts and for cash deposits exceeding Rs. 50,000 in a day with a bank; where PAN is unavailable, Form 60 may be used in specified cases.
The SFT framework requires reporting entities to aggregate all accounts of the same nature held by that person during the year and to attribute joint-account values to all holders. In practice, splitting cash across multiple accounts does not reliably avoid reporting.
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Large cash withdrawals create a second compliance layer. Under section 194N, banks, co-operative banks and post offices must deduct TDS at 2% or 5%, depending on the taxpayer’s filing history and withdrawal level.
For regular return filers, the Department’s guidance places the key threshold at Rs. 1 crore in a year; for specified non-filers, TDS can begin once cash withdrawals cross Rs. 20 lakh.
Taxpayers should also not confuse SFT reporting with separate anti-cash rules. The Department separately states that section 269ST restricts the receipt of Rs. 2 lakh or more in cash in specified cases, and section 40A(3) can disallow business cash expenses above Rs. 10,000 per day per person.
Also Read: Can the Income Tax Department Track Bitcoin and Crypto Transactions in India?
Why this Matters
Taxpayers frequently confuse automated reporting triggers with absolute banking restrictions. Under the 2026 rules, these thresholds simply feed your Annual Information Statement. The true risk is an income mismatch, which automatically alerts tax authorities to issue compliance notices.
AIS now displays SFT information reported by banks and other institutions, and the Department’s own FAQ says taxpayers should review AIS, update the Taxpayer Information Summary where needed, and file returns only after checking for errors to avoid future notices “on account of mismatch.” In 2026, the real risk is usually not crossing a threshold by itself; it is crossing it without an income trail that matches your return.
1. Are these transaction limits or reporting limits?
Most high-value financial thresholds under SFT are reporting limits, not direct restrictions on banking transactions. Crossing a threshold means banks or institutions may report the transaction to the Income Tax Department.
2. What are the key cash deposit reporting limits in 2026?
Cash deposits of Rs. 10 lakh or more in savings-type accounts are reportable under SFT.
For current accounts, cash deposits or withdrawals of Rs. 50 lakh or more in a financial year must be reported.
3. Why is PAN important for high-value transactions?
PAN helps the Income Tax Department link bank accounts, TDS/TCS credits, returns and specified transactions. Splitting money across accounts may not avoid reporting as transactions are aggregated by PAN.
4. When does TDS apply to cash withdrawals?
For regular return filers, TDS under Section 194N generally applies when cash withdrawals exceed Rs. 1 crore in a year. For specified non-filers, TDS can begin after withdrawals cross Rs. 20 lakh, depending on the applicable conditions.
5. How should taxpayers avoid notices from AIS mismatches
Taxpayers should review their AIS and Taxpayer Information Summary before filing returns.
The main risk is not crossing a threshold, but having high-value transactions that do not match declared income.
