Confused about what Income Tax Department tracks in India? Here’s what you need to know

The Press Information Bureau’s fact-checking unit has dismissed viral social media claims alleging that India’s Income-Tax Department (ITD) monitors citizens’ emails, social media accounts, digital payments, online shopping and personal apps. According to official clarification and expert inputs, the claims are misleading and not supported by existing legal provisions.

The misinformation gained traction after a widely shared Instagram post suggested that the ITD would have unrestricted access to individuals’ private digital activity, including social media profiles, trading platforms and lifestyle behaviour. However, government clarification and tax experts confirm that there is no system in place to track personal online behaviour or digital spending patterns.

The ITD receives information only through legally mandated disclosures such as the Statement of Financial Transactions (SFT), filed by banks and other specified institutions for reporting high-value financial transactions. This framework is transaction-based and designed to promote transparency and detect potential tax evasion, rather than profiling personal lifestyle or monitoring online usage, according to various reports.

Which transactions are monitored under IT rules?

Under Section 285BA of the Income-tax Act and Rule 114E of the Income-tax Rules, 1962, specified high-value transactions exceeding prescribed thresholds in a financial year are reported to the ITD via Form 61A. These include:

• Cash deposits above ₹10 lakh in savings or fixed deposit accounts
• Cash deposits or withdrawals above ₹50 lakh in current accounts
• Credit card payments of ₹1 lakh in cash or ₹10 lakh through other modes
• Investments above ₹10 lakh in bonds, shares, debentures or mutual funds
• Property purchase or sale valued at ₹30 lakh or more

What taxpayers should know

Experts clarify that only designated high-value transactions are tracked and there is no blanket surveillance on all financial activities. If discrepancies arise between reported transactions linked to a PAN and the income declared in tax returns, the department may issue notices. Taxpayers who can justify such discrepancies with valid documentation generally do not face further scrutiny.

The clarification reinforces that law-abiding taxpayers have no reason for concern, and there is no government mechanism to monitor private digital activity such as emails, social media usage, app-based spending or personal browsing behaviour.