Nobody likes getting an income tax notice—especially when it happens due to avoidable mistakes. Many taxpayers try to save tax or invest money, but sometimes they unintentionally trigger red flags that catch the attention of the Income Tax Department.
The good news?
If you plan, document, and report correctly, most notices can be avoided.
Below are 5 common high-value transactions that can invite scrutiny—along with simple examples and tips to stay safe.
1) High-Value Fixed Deposits (FDs)
Fixed Deposits are considered safe and reliable, but large FD investments can come under observation.
✅ What can trigger attention:
If you create FDs worth ₹10 lakh or more in a financial year, it may raise questions about the source of funds.
Example:
You make 3 different FDs:
- ₹4 lakh + ₹3 lakh + ₹3.5 lakh = ₹10.5 lakh total in one year
Even though it’s split, the total value can still attract scrutiny.
✅ How to stay safe:
- Keep proof of income (salary slips, business receipts, bank statements)
- Ensure the amount matches your declared income in ITR
- Avoid unexplained cash deposits before booking FDs
2) Heavy Deposits in Savings Accounts
Savings account activity is normal—but large deposits can draw attention, especially if they don’t match your income profile.
✅ What can trigger attention:
Depositing ₹10 lakh or more in a savings account in a financial year may prompt the department to seek clarification.
Example:
You deposit ₹1 lakh every month in cash.
In a year: ₹1 lakh × 12 = ₹12 lakh cash deposit
✅ How to stay safe:
- Avoid frequent high cash deposits without proof
- Maintain supporting records (rent receipts, invoices, loan proof, etc.)
- If income is from business, show it properly in ITR
3) Large Investment in Real Estate
Property purchases are one of the most monitored transactions in India because they involve high-value payments.
✅ What can trigger attention:
Buying property worth ₹30 lakh or more can result in extra tax verification.
Example:
You purchase a flat worth ₹42 lakh.
Even if part is paid through home loan, the transaction is still reported and can be tracked.
✅ How to stay safe:
- Always pay through banking channels
- Keep a record of:
- Sale agreement
- Stamp duty & registration proof
- Loan documents (if any)
- Report capital gains correctly if you sold any asset for this purchase
4) Big Investments in Mutual Funds, Bonds, or Debentures
Mutual funds are popular for long-term wealth building, but large investments can be flagged if the source of money is unclear.
✅ What can trigger attention:
Investing ₹10 lakh or more in a financial year in mutual funds, bonds, or debentures may invite scrutiny.
Example:
You invest:
- ₹5 lakh lump sum in equity funds
- ₹6 lakh in bonds
Total = ₹11 lakh in one year
✅ How to stay safe:
- Prefer investing through bank transfers (not cash)
- Keep account statements and investment proofs
- Ensure the investment matches income declared in your return
5) Spending Big on Foreign Travel or Foreign Currency
Foreign spending and forex transactions are closely tracked, especially under international reporting standards.
✅ What can trigger attention:
Spending ₹10 lakh or more on:
- Traveller’s cheques
- Forex cards
- Foreign currency
- Debit/credit card foreign transactions
…can attract a notice.
Example:
You spend ₹3 lakh on flight + ₹4 lakh on hotel + ₹4 lakh via card abroad
Total = ₹11 lakh foreign spend
✅ How to stay safe:
- Keep invoices, ticket confirmations, hotel bills
- Use official channels for forex purchase
- Ensure your spending aligns with your disclosed income
Quick Checklist to Avoid Income Tax Notices ✅
To stay on the safe side, follow these simple habits:
✅ File ITR on time
✅ Match investments and deposits with actual income
✅ Avoid unexplained cash transactions
✅ Maintain proofs for every high-value payment
✅ Don’t ignore notices—respond within the deadline
✅ If needed, consult a tax expert for clean reporting
Final Word
Big transactions are not illegal—but unreported or mismatched transactions are what trigger trouble. By tracking these five areas and keeping proper documentation, you can reduce the risk of getting an income tax notice and stay fully compliant.
