A savings account is not just where your salary lands and bills get paid; it’s the clearest trail of your money habits. Banks and other institutions submit reportable information on specified financial transactions, and the tax department increasingly cross-checks this data with your AIS/TIS and ITR. If flows in your account look out of sync with your declared income, you can be asked to explain.
Transactions that tend to raise eyebrows
Large cash deposits, sudden spikes in activity on an otherwise quiet account, and high-value credit card repayments routed through your savings account can all draw a closer look. Property-linked inflows and outflows are matched against registry data, so unexplained transfers around a purchase or sale are likely to be noticed. Even interest and dividend credits matter: if your statement shows income that’s missing from your return, the mismatch can lead to a nudge or notice.
Patterns the department can see
Data analytics focuses less on one-off events and more on behaviour. Multiple smaller cash deposits that add up to a big number, frequent cash withdrawals without a clear purpose, or regular transfers between personal and third-party accounts can look like attempts to mask the source or destination of funds. If your spending and transfers suggest a lifestyle far above your reported income, expect follow-up questions.
How to stay compliant without stress
Document the source of any large deposit—gift deeds, loan agreements, asset-sale proofs, or reimbursement letters—so you can substantiate it later. Report all bank interest, FD interest, dividends and capital gains in your ITR, not just your salary. Keep personal and business money separate, avoid letting others use your account, and add a short note in your records explaining unusual one-time flows such as weddings, medical expenses or relocations. When you revive a dormant account, maintain a simple paper trail for the renewed activity.
What to do if you’ve already slipped
If you forgot to report interest or made a large deposit you haven’t explained, correct the record at the earliest opportunity—through an updated computation, a revised ITR (if still within timelines), or a clear response if the department writes to you. Being proactive and transparent usually resolves routine mismatches quickly and avoids penalties from escalating.
FAQs
Will one big cash deposit automatically trigger a notice? Not necessarily. It may prompt a query, and your response—supported by simple documents—often closes the matter. The risk rises when the deposit doesn’t align with your income or you can’t show a legitimate source.
Can splitting a large deposit into smaller amounts help avoid scrutiny? No. Systems look at totals and patterns over the year. Several small deposits that add up to a large figure are more likely—not less—to attract questions.
What if my AIS shows interest or dividends I forgot to report? Reconcile your statements, update your workings, and disclose the missing income in your filing or response. Quick, accurate clarification is the easiest way to settle discrepancies.
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