New Delhi, Aug. 24 -- Using UPI, NEFT, RTGS or IMPS to transfer money does not, by itself, mean the transaction will trigger an income tax notice. The Income Tax Department's reporting and compliance systems focus on financial information and potential discrepancies, rather than treating a particular digital payment mode as an automatic trigger for scrutiny.

The key question for taxpayers is whether the money moving through their bank accounts can be explained and reconciled with their income, investments and other financial information reported to the tax department.

The Income Tax Department receives financial information from banks, financial institutions and other reporting entities under the Statement of Financial Transactions (SFT...