How the Income Tax Department tracks your money in 2025: AIS, SFT & AI?

India’s Income Tax Department (ITD) now watches financial footprints with a blend of mandatory third-party reports and AI analytics. From high-value deposits to stock trades and overseas spends, most trails land in a single view called the Annual Information Statement (AIS)—and mismatches with your return can trigger e-campaign nudges or e-verification. 

The core pipes feeding the tax grid

• AIS & TIS (Taxpayer Information Summary): Your PAN-wise 360° view showing TDS/TCS, interest, dividends, securities/mutual fund transactions, property deals, foreign remittances, and more. It’s visible in your e-filing account and used for prefill and risk checks.
• SFT (Statement of Financial Transactions): Banks, brokers, mutual funds, registrars/sub-registrars, NBFCs, depositories, credit-card issuers and others must report specified high-value transactions against your PAN in Form 61A under Rule 114E. These feed straight into AIS. Recent coverage includes interest income (SFT-016) and depository transactions. 
• PAN rules that force visibility (Rule 114B): You must quote PAN for many deals (e.g., cash deposits over ₹50,000 in a day; property purchases above ₹10 lakh; big cash payments for goods/services), ensuring they can be matched to you. Banks were reminded to enforce this. 
• PAN–Aadhaar linkage: Unlinked PANs became inoperative after June 30, 2023, breaking refunds and some transactions—another compliance lever to keep data consistent.
• Direct tax–indirect tax data exchange: CBDT and CBIC have a renewed MoU to exchange data (including GST-side signals) on a regular, automated basis—useful to reconcile income with sales/expenses. 

The analytics layer: Project Insight, AI nudges & e-Verification

• AI-led risk scoring: CBDT says it is ramping up AI to flag non-filers with high-value SFT activity, repeated errors, or aggressive deduction claims. This powers targeted emails/SMS nudging taxpayers to reconcile AIS/ITR. 
• E-Verification Scheme, 2021: When mismatches persist, cases move into faceless e-verification—you’re asked online for explanations or documents before deeper action. 

What gets reported most in 2025

• Large cash deposits/withdrawals & time deposits; credit-card payments; property purchases/sales; mutual fund, bond and share transactions; brokerage/depository off-market transfers; dividends/interest; and other high-value moves—16 broad buckets are commonly tracked via SFT and surfaced in AIS.

What triggers a nudge or notice

• You don’t file a return but AIS shows significant SFT activity.
• Your ITR omits income that appears in AIS (e.g., bank interest, dividends, stock gains).
• High deductions/exemptions don’t match third-party trails (rent, donations, insurance, etc.). Recent drives used AI to expose mass bogus claims.

What taxpayers should do (practical checklist)

1. Open AIS/TIS before filing and again after June/July updates; correct through the AIS feedback workflow if something is off. 
2. Match SFT-heavy items (cash deposits, credit-card spends, securities, property) with your books and report gains/interest fully.
3. Keep PAN operative (Aadhaar-linked) and ensure PAN is quoted in all specified transactions to avoid failed refunds or compliance errors. 
4. Respond to e-campaigns on the compliance portal if you get a mismatch email/SMS; it’s designed to let you explain or update without escalation. 

Why this matters

With ₹27.02 lakh crore in gross direct tax collections for FY 2024-25, the government credits improved compliance and data-driven monitoring as key drivers—signalling more analytics-first enforcement ahead.

Read More: How Much Cash Can You Keep at Home in India?