New Delhi, Oct. 21 -- Receiving large amounts through UPI does not automatically attract an income tax notice. However, taxpayers whose bank accounts show substantial credits that do not match their declared income may face questions from the Income Tax Department, even if the money was received through legitimate digital transactions.

Consider a salaried individual who declares an annual income of Rs.12 lakh but receives Rs.40 lakh in their bank account during the year. The additional credits could include money from friends, family transfers or business receipts. While these transactions are not necessarily taxable, the individual may have to explain their source if questioned by tax authorities.

According to CA Parag Jain, Tax Head a...