Income Tax Notice for Cash Deposits: What Kolkata Traders and Families Should Do (AIS, SFT Limits and Replies)
Banks, post offices, registrars and companies report high-value transactions to the Income Tax Department every year through Statements of Financial Transactions (SFT). If you deposit ₹10 lakh or more in cash in savings accounts in a year, or ₹50 lakh or more in current accounts, or buy property worth ₹30 lakh or more, the transaction appears in your Annual Information Statement (AIS). If your return does not explain it, you may get an e-campaign email, a query on the compliance portal, or a notice. Many Kolkata traders who handle cash sales, and families who deposit cash gifts or old savings, receive such messages. Most can be closed with a clear reply and records.
What gets reported
| Transaction | Reporting threshold in a year |
|---|---|
| Cash deposits in savings accounts | ₹10 lakh or more (all accounts with a bank) |
| Cash deposits or withdrawals in current accounts | ₹50 lakh or more |
| Fixed deposits (other than renewal) | ₹10 lakh or more |
| Cash payment of credit card bills | ₹1 lakh or more |
| Any payment of credit card bills | ₹10 lakh or more |
| Purchase or sale of immovable property | ₹30 lakh or more |
| Purchase of shares, mutual funds, bonds | ₹10 lakh or more |
| Cash receipts by a business for goods or services | Above ₹2 lakh per transaction |
Why the notice comes
The department compares AIS with your return. If you filed no return, or your income looks too low for the deposits, the system flags it. For a Burrabazar trader depositing daily cash sales, the deposits are normally business receipts and should match books and GST returns. For a household, deposits may come from savings, gifts on a wedding, or sale of old jewellery, which need evidence.
How to respond
- Log in to the e-filing portal and open the compliance portal (e-campaign or e-verification section).
- Check the information in AIS. If it is wrong (for example, a bank reported someone else’s deposit), give feedback that it is incorrect.
- Explain the source: choose the right option: business receipts already in the return, savings from earlier years, gifts from relatives, loan from a known person, sale of an asset, and so on.
- Attach evidence: cash book, sales register, GST returns, bank statements, gift deeds or letters, sale bills.
- Revise or file the return if income was missed. An updated return can be filed within the time allowed, with additional tax.
- Respond on time. Ignoring an e-campaign can lead to a formal notice or reassessment.
What happens if cash is not explained
Cash credits, deposits or investments that cannot be explained are taxed as unexplained income at a flat high rate (60% plus surcharge and cess, effectively about 78%), with penalty in addition. This is why records matter more than the amount itself.
Cash rules every Kolkata business should follow
- Receipts: do not accept ₹2 lakh or more in cash from one person in a day, for one transaction or one event. The penalty equals the amount.
- Payments: expenses paid in cash above ₹10,000 to one person in a day are not deductible (₹35,000 for transporters).
- Loans and deposits: do not take or repay loans or deposits of ₹20,000 or more in cash.
- Property: no cash of ₹20,000 or more for any immovable property deal.
Practical record-keeping
- Keep a daily cash book and deposit cash sales regularly, matching your GST turnover. See our GST guide for Burrabazar traders.
- For family cash, keep a note of the source when you deposit: wedding gifts with a list of givers, sale of gold with the jeweller’s bill.
- Deposit in your own name; depositing in a relative’s account creates questions for both.
Example: a Gariahat garment shop
A shop owner deposited ₹28 lakh in cash in a current account over the year, while his return showed turnover of ₹40 lakh with 70% cash sales. The deposits match the declared cash sales, so the reply is straightforward: attach the cash book, GST returns and bank statements, and select “business receipts already included in the return”. By contrast, a household that deposited ₹12 lakh in a savings account with no return filed received an e-campaign; the reply included a gift letter from the grandmother, the sale bill of old jewellery from a Bowbazar jeweller, and a belated return.
Updated return as a safety valve
If you realise income was left out, an updated return can be filed within the time limit with additional tax of 25% to 70% of the tax and interest, depending on how late it is. It is usually better than waiting for a notice, but it cannot be filed after a search or once a notice for reassessment has been issued for that year.
Mistakes to avoid
- Replying “not my transaction” when it is, simply because the amount looks large.
- Depositing cash in several family members’ accounts to stay below the reporting limit; the department links PAN and Aadhaar across accounts.
- Ignoring old pending e-campaigns, which lead to reassessment notices later.
FAQs
Will I get a notice for depositing ₹5 lakh cash in my savings account?
It will not be reported as an SFT if total cash deposits in the year are below ₹10 lakh, but large deposits can still be questioned if they don’t match your income.
How do I reply to an income tax e-campaign on cash deposits?
Through the compliance portal on the e-filing website, selecting the source and attaching evidence.
Is cash from wedding gifts taxable?
Gifts received on the occasion of your marriage are exempt, but you should be able to show who gave them.
Can I deposit old savings kept at home?
Yes, but keep a record of the source, such as earlier withdrawals, gifts or sale proceeds, in case you are asked.
What is an e-campaign?
A non-intrusive email and portal message asking you to explain or report a transaction seen in AIS; replying on time usually closes it.
TAXAJ replies to income tax e-campaigns and notices for traders and families in Kolkata. Talk to our Kolkata team.
Last updated 11 November 2026. Sources: Income-tax law and rules on Statements of Financial Transactions, AIS, unexplained credits and the special rate on unexplained income, and cash transaction restrictions; CBDT guidance on the compliance portal. General information only.
