Vinay started doing weekend pizza deliveries at 19 to fund his coffee habit and his Zerodha account. By the time he graduated, he had three years of gig income (₹4.2L → ₹4.8L → ₹4.6L), three years of small stock trades, two credit cards he used "for points", and zero income tax returns filed. "My income is below ₹5 lakh basic. I don't need to file."
Last Tuesday, his mother handed him a brown envelope. Income Tax Department. Section 143(2). The annexure listed every UPI deposit from the food app, every dividend, every margin trade, every credit card spend above ₹2 lakh.
Vinay's first thought: "Wait — how do they know all of this?"
- The department's Annual Information Statement (AIS) aggregates data from banks, brokers, mutual funds, registrars, GST, credit card companies and aggregator platforms — for every PAN.
- It works whether or not you file a return. If your reported transactions look bigger than your declared income — or no return exists — you can be picked for scrutiny.
- The "basic exemption limit" is not the filing limit. The basic exemption is ₹2.5L (old) / ₹3L (new). The filing limit is much lower in many cases — including if you have foreign income, brokerage transactions, electricity bills above ₹1L, or high-value spends.
- Notice flavours: 143(2) — scrutiny, 142(1) — call for info, 148 — reassessment, 245 — refund adjustment. Each has a different ask and a different clock.
- The fix is almost always: respond within the deadline, reconcile AIS line-by-line, file a belated/updated return if needed. Ignoring it is the only move that's actually expensive.
How the department knows everything
Pre-2018, the income tax department mostly knew what you told it. Today, your PAN is the connecting key for a giant grid called the Statement of Financial Transactions (SFT). Every institution below has a legal duty under Sec 285BA to report certain transactions linked to your PAN.
Banks
SBNT-1 to SBNT-6
Cash deposits ≥ ₹10L in savings accounts. Fixed deposits ≥ ₹10L. Demand draft purchase ≥ ₹10L in cash. Foreign currency above thresholds. UPI inflows are tracked at aggregate level via the bank.
Brokers / Mutual Funds
SBNT-13 to SBNT-17
All buy/sell of equity above thresholds, MF redemptions ≥ ₹10L, dividends paid, bonus issues. Zerodha, Groww, Upstox — they all report. Your demat statement and the AIS will match line-by-line.
Credit cards
SBNT-12
Credit card spends above ₹2L cash payment or ₹10L through any mode per year, per card. Your travel splurges become a Form 26AS line item.
Property registrars
SBNT-4, 19
Any purchase or sale of immovable property ≥ ₹30L is reported by the sub-registrar. Stamp duty value is what gets reported — not just consideration.
Aggregator platforms
Sec 194O
Swiggy, Zomato, Ola, Uber, Urban Company, Amazon, Flipkart — all deduct 1% TDS on payments to you under Sec 194O. That TDS lands in your 26AS / AIS automatically. Even on payments below ₹5L.
Everything else
The new SFT codes
Interest from bank/post office, dividend, foreign remittance under LRS, salary TDS, professional fee TDS, GST turnover, electricity bills above ₹1L, hotel bills above ₹20K cash. All flow into your AIS. You can view it at the e-filing portal under "Services → AIS".
Vinay's actual AIS — what the notice was looking at
When you log into the income tax portal as Vinay and click AIS, here's what the department saw for FY 2022-23. (We're filling in plausible numbers.)
- Receipts from aggregator platform (Sec 194O TDS at 1%) — ₹4,82,300
- Interest from savings account — ₹3,250
- Equity sales (Zerodha) — gross sale value ₹3,18,000 (turnover, not profit)
- Dividend received — ₹4,810
- Credit card spends (Card 1) — ₹2,14,500
- UPI inflows (aggregate) — ₹6,72,000 (includes the ₹4.82L above + transfers from parents + Diwali money)
From the department's view, Vinay has:
- Reported income of nil (no return).
- Reported transactions of ~₹15L on the AIS.
- Credit card spends alone of ₹2.14L (over the SFT threshold of ₹2L cash component — though aggregate ₹10L is the filing trigger).
- A clear obligation to file a return because his gross receipts from a business/profession (food delivery) exceeded basic limits.
The algorithm picks this up. The case gets flagged. Notice goes out.
The notice types — what's actually in your envelope
142(1) — Call for info
Pre-scrutiny
"Please file a return / give us documents." This is the polite version. Time: 30 days. Reply via e-Proceedings. If you respond well, often closes there.
143(2) — Scrutiny
Vinay's notice
"We are examining your return / non-return in detail." Time-bound (3 months from end of FY in which return was filed). Has to be replied on e-Proceedings with documents. Outcome: assessment order under Sec 143(3).
148 — Reassessment
Cold case reopened
"We have information that you escaped assessment." Now requires approval under Sec 148A. Time limit: 3 years (₹50L+ escaped: 5 years; ₹2cr+ in flight cases: 10 years).
What Vinay should actually do — in order
Most 143(2) notices are not accusations. They're "explain your numbers". Calmness is everything. The clock starts the day the notice is served.
For each transaction, mark it: (a) correct, (b) duplicate, (c) wrong PAN, (d) wrong amount, (e) belongs to another year. Submit feedback for any wrong entries — the system updates and the AO sees your version.
ITR-U under Sec 139(8A) lets you file even after the original deadline, for up to 48 months (the latest extension makes it 24 from end of relevant AY but check current limit). You pay tax + 25%-70% additional tax depending on lateness. Often cheaper than a 200% penalty under scrutiny.
For Vinay: aggregator earnings statement, bank statement showing the ₹4.82L was the same money credited, screenshot of UPI transfers from parents (these are gifts from relative — exempt under 56(2)(x)). Stock trade contract notes showing actual profit (not turnover).
If not satisfied → demand notice + 30-day clock. You then appeal to CIT(A) under Sec 246A. The system is designed to be appealable. Don't stop responding.
You must file an ITR even below the basic exemption limit if you have: foreign assets, foreign income, electricity bill ≥ ₹1L, foreign travel ≥ ₹2L, deposited ≥ ₹1cr in current accounts or ≥ ₹50L in savings, business turnover ≥ ₹60L (or ₹50L for profession), or TDS/TCS deducted ≥ ₹25k (₹50k senior citizens). Vinay's case: Sec 194O TDS was deducted on his food-delivery income. Filing was mandatory.
What gross numbers actually attract scrutiny — and what don't
Triggers ⚠️
High-risk patterns
No ITR + Sec 194 TDS in AIS. ITR filed but turnover < SFT-reported transactions. Sudden jump in declared income vs prior years. Property purchase > declared income for 5 yrs. Cash deposit ≥ ₹10L without explanation. F&O trade with turnover > ₹2cr and no tax audit.
Generally fine ✓
Even if "high value"
High UPI transactions matching declared business turnover. Credit card spends matching declared income. Property purchase backed by home loan (loan is visible in 26AS). Inheritance reported under Sec 56(2)(x) exemption. Gifts from relatives correctly classified.
The funny part: even if you pay zero tax, you still file
The Indian tax system has slowly converted "filing" from a "I owe tax" exercise to a "explain your money trail" exercise. Banks, brokers, registrars, aggregators — everyone reports. The return is your chance to reconcile their version with yours. If you don't file, the only narrative on file is theirs.
So the practical advice for a 22-year-old delivery partner is the same as for a 42-year-old founder: look at your AIS every year, file a return even if income is below taxable limit, and write a clean reconciliation note in your own files. Not for the department. For you. So that in three years, when a 143(2) lands, you have a story ready in 30 minutes instead of three sleepless weeks.
Quick answers
Gifts from parents are exempt under Sec 56(2)(x) — they're "relatives" as defined. Document the relationship and source. Bank transfers with narrations help. Cash gifts above ₹2L per single occasion attract Sec 269ST disallowance to the giver, but not income tax to you.
No. Income is profit, not turnover. Delivery sale: capital gains (sale − cost − expenses). Intraday: business income (gross profit / loss). F&O: business income (absolute sum of profits and losses is the turnover for audit-trigger purposes). What you owe is on net result, not gross volume.
No — 194O TDS is a credit, not a final tax. Your actual tax depends on total income (delivery + other). If you owed nothing, the TDS becomes refundable when you file. If you didn't file, the TDS sits unrefunded and the AO has a record that you had business income.
The notice itself will state a date. Usually 15–30 days. You can ask for one adjournment of about 15 days. After that, the AO can pass an ex-parte order (best-judgement assessment) under Sec 144 — and best-judgement orders are always painful.
Yes. Log in to incometax.gov.in → Services → Annual Information Statement (AIS). Available for last 6 years. Make this a habit: open it once a year, before filing your return, and reconcile.
When you might want help
Three scenarios: (1) You've actually received a 143(2) or 148 notice — get help drafting the e-Proceedings reply within the deadline. (2) Your AIS shows entries you don't recognise — needs feedback submission and possible follow-up with the reporting institution. (3) You haven't filed for 1–2 years and want to file ITR-U cleanly before a notice arrives.
Got a notice — or worried one's coming?
Notice replies, AIS reconciliation, ITR-U filing. We work to a 48-hour first-draft turnaround.
"Vinay" and the AIS line items shown are composite illustrations drawn from typical scrutiny case files. They are not based on any specific individual.