Government Tracks Large Financial Transactions Through SFT Mechanism to Enhance Tax Compliance

India's government uses the Statement of Financial Transaction (SFT) mechanism to monitor large financial transactions, such as cash deposits, withdrawals, property sales, and investments, even if not reported in income tax returns. This digitalized process helps track about 16 types of significant transactions, contributing to an increase in direct tax collections and a growing number of income tax filers. Entities handling these transactions are required to report them to the tax authorities.