The Annual Information System (AIS) is designed to capture various high-value transactions and income data. The thresholds for AIS reporting are typically set by the Income Tax Department to ensure that only significant or high-value transactions are reported by third parties (such as banks, financial institutions, and other organizations). These thresholds are defined under the Statement of Financial Transactions (SFT) reporting guidelines. Below is a detailed list of transactions and their respective thresholds for AIS reporting:

1. Savings Account Deposits/Withdrawals

• Threshold: ₹10 lakh or more in aggregate in a financial year.
• Details Reported: Any cash deposits or withdrawals made in a savings bank account that exceeds ₹10 lakh in a year will be reported.

2. Current Account Deposits/Withdrawals

• Threshold: ₹50 lakh or more in aggregate in a financial year.
• Details Reported: Cash deposits or withdrawals exceeding ₹50 lakh from a current account are reported to the Income Tax Department.

3. Fixed Deposit (FD)

• Threshold: ₹10 lakh or more in aggregate in a financial year.
• Details Reported: Any cash deposits of ₹10 lakh or more into a fixed deposit account in a year will be reported.

4. Credit Card Payments

• Threshold:
  • ₹1 lakh or more in cash in a year.
  • ₹10 lakh or more via other payment methods (e.g., cheque, online, or card-to-card transfers) in a financial year.
• Details Reported: The credit card company will report if the total credit card bill payments cross these thresholds in a year.

5. Purchase or Sale of Immovable Property

• Threshold: ₹30 lakh or more.
• Details Reported: Property registrars report the purchase or sale of any immovable property worth ₹30 lakh or more. Both the buyer and seller details are reported.

6. Purchase of Shares, Mutual Funds, Debentures, or Bonds

• Threshold: ₹10 lakh or more in aggregate in a financial year.
• Details Reported: Transactions involving the purchase of shares, mutual funds, debentures, or bonds exceeding ₹10 lakh in a year are reported.

7. Sale of Mutual Funds

• Threshold: ₹10 lakh or more in aggregate in a financial year.
• Details Reported: Redemptions or sales of mutual funds exceeding ₹10 lakh are reported to the Income Tax Department.

8. Foreign Remittances under Liberalised Remittance Scheme (LRS)

• Threshold: ₹10 lakh or more in a financial year.
• Details Reported: Any foreign remittance made by an individual under the LRS exceeding ₹10 lakh in a financial year is reported.

9. Purchase of Foreign Currency

• Threshold: ₹10 lakh or more in a financial year.
• Details Reported: Any purchase of foreign currency exceeding ₹10 lakh in a year is reported.

10. Payment for Travel or Expenses

• Threshold: ₹2 lakh or more for travel.
• Details Reported: Payments for foreign travel exceeding ₹2 lakh in a single transaction or cumulatively are reported.

11. Cash Payment for Goods and Services

• Threshold: ₹2 lakh or more in a single transaction.
• Details Reported: Any purchase of goods or services exceeding ₹2 lakh in cash (such as luxury items, cars, jewelry, etc.) will be reported.

12. Sale of Motor Vehicle

• Threshold: No specific threshold for luxury motor vehicles.
• Details Reported: Any sale or purchase of a motor vehicle (other than two-wheelers) is reported, regardless of the value.

13. Cash Receipt for Goods or Services

• Threshold: ₹2 lakh or more in a financial year.
• Details Reported: Any cash receipts exceeding ₹2 lakh for the sale of goods or services are reported to the tax authorities.

14. Life Insurance Premium

• Threshold: ₹5 lakh or more in aggregate in a financial year.
• Details Reported: If a policyholder pays ₹5 lakh or more as a premium on life insurance in a financial year, it will be reported.

15. Donations and Contributions

• Threshold: Donations or contributions to certain specified entities like political parties or charitable institutions exceeding certain limits must be reported. While there isn’t a uniform threshold for all donations, substantial contributions may get flagged for review.

16. Securities Transactions (Stock Market)

• Threshold: ₹10 lakh or more.
• Details Reported: Reporting is triggered if the aggregate of transactions in securities (such as stock purchases, sales, etc.) exceeds ₹10 lakh in a financial year.

17. Rent Received

• Threshold: ₹40,000 per month or more.
• Details Reported: Tenants paying rent of ₹40,000 or more per month must deduct TDS, and this is reported to the tax authorities.

Implications of AIS Reporting

1. Transparency and Compliance: The Income Tax Department can track high-value transactions and verify if they align with the income declared by taxpayers. AIS reporting helps ensure that taxpayers disclose their financial activities accurately.
2. Cross Verification: The data in AIS is collected from multiple sources such as banks, financial institutions, mutual fund companies, and registrars. This allows the tax department to cross-verify income and financial transactions.
3. Penalty for Non-Compliance: Failing to report transactions that appear in AIS or providing incorrect details in tax returns may attract penalties, scrutiny, or legal action under the Income Tax Act.

Conclusion

The thresholds for AIS reporting are set to capture significant financial transactions, making it easier for tax authorities to ensure compliance and reduce tax evasion. Taxpayers must be aware of these thresholds and ensure that their financial activities are accurately reported in their tax returns to avoid any penalties or discrepancies with the Income Tax Department.