Starting Assessment Year 2025–26, individuals with aggregate savings bank deposits exceeding ₹50 lakh in a financial year are mandatorily required to file an Income Tax Return (ITR), even if their total income falls below the taxable threshold. In a significant compliance update, the Income Tax Department now requires taxpayers to report all self-transfers, inter-bank movements, UPI transactions, and wallet credits as part of their ITR disclosures. This move aims to plug tax evasion loopholes by tracking high-volume financial activity and ensuring transparency of fund movements, even if the transactions represent internal or non-income-based transfers.
🧾 1. Mandatory Reporting of Self‑Transfers and Contra Entries
- If your aggregate deposits into savings bank accounts (across banks) in the financial year reach or exceed ₹50 lakh, you must report all credit entries in your bank(s), even if income is below the taxable limit.
- This includes:
- Transfers between your own bank accounts
- UPI-to-wallet or wallet-to-UPI transfers
- Wallet-to-bank or bank-to-wallet movements
- Cheque deposits and interbank transfers
- These are known as self‑contra entries and must be included in ITR details since banks and tax authorities can see transaction flows even when no income arises.
2. ITR Filing Becomes Compulsory Despite Low Income
- Even if your total income is below the basic exemption threshold (e.g., ₹2.5 lakh/₹3 lakh depending on age), you must file an ITR:
- Once you have deposited ₹50 lakh or more in savings accounts during the FY.
- This is part of expanded criteria where financial activity—not just taxable income—triggers a filing requirement.
3. Why the Rule Was Introduced
- The government views large savings account inflows as proxies for interest income (or other earnings) that ought to be taxed.
- Failure to report or explain such high-volume movements can lead to notices under Section 68, potentially leading to taxation up to 60% + surcharge + cess if sources aren’t satisfactorily explained.
4. How to Prepare Your ITR Correctly
| Step | What You Should Do |
|---|---|
| 1. Sum up credits | Calculate total deposits across all savings accounts (cash, UPI, account transfers, wallet inflows). |
| 2. Identify contra entries | Include internal transfers—no exclusions just because it’s your own money. |
| 3. Declare interest & other incomes | List any interest earned (e.g. bank/wallet), capital gains, or rewards. |
| 4. Choose correct ITR form | Use ITR‑1/2 for salaried individuals with interest income; ITR‑4 if income under presumptive business scheme, etc. |
| 5. Upload supporting docs | Bank statements/balance sheets showing deposit details, interest certificates, and wallet statements. |
| 6. Provide explanations if required | Be prepared to explain that high deposits are internal transfers or savings—not unaccounted income. |
✅ At a Glance: Should You File ITR?
- Yes, if:
- You credit ₹50 lakh or more in savings accounts during FY.
- You spend ₹2 lakh+ on overseas travel.
- Electricity bills exceed ₹1 lakh, TDS/TCS collected is high.
- Other triggers: Current‐account deposits ≥ ₹1 crore, capital gains exemptions, etc.
💡 Real‑World Example
Suppose during FY 2024–25:
- You transfer ₹30 lakh from Bank A to Bank B.
- Later credit ₹20 lakh via UPI into Wallet.
- You deposit ₹10 lakh into Fixed Deposits.
–> Total credits into savings = ₹60 lakh → crosses ₹50 lakh threshold, so ITR filing becomes mandatory, and all these transactions—including internal transfers—must be submitted in your return—even if your taxable income is low.
📌 Final Takeaways
- Crossing ₹50 lakh in savings deposits triggers ITR filing, regardless of income.
- All self‑transfers and contra entries across UPI, wallets, and accounts must be disclosed.
- Being transparent now avoids IT scrutiny or notices from CBDT under sections like 68 or 194N.
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Accurate documentation while filing makes a big difference—show that the movements reflect internal transfers or savings, not untaxed income.