To monitor high-value transactions made by taxpayers, the income tax department introduced a new concept of furnishing a Statement of Financial Transactions or reportable accounts. Section 285BA of the Income-Tax Act requires specified reporting persons to furnish this statement. Rule 114E of the Income Tax Rules 1962 specifies that this statement must be furnished in Form 61A of Income Tax Act.
The Central Board of Direct Taxes (CBDT) prescribed the Format, Procedure, and Guidelines for submission of Statement of Financial Transactions (SFT) for Interest income vide a Notification No. 2 of 2021 dated 20th April 2021. With this Notification, CBDT announced that the statement of financial transactions shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered.
What is a Statement of Financial Transaction (SFT)?
Filers must provide a statement of financial transaction or reportable account for their defined financial transactions. Such information reported will be reflected in the AIS – Annual Information statement of the taxpayer. This helps the taxpayer identify all the transactions reported to the income tax department and file their ITR accurately.
Statement of Financial Translations or SFT refers to information related to certain high-value transactions which specified persons are required to report to the income tax department. The SFT was earlier known as ‘Annual Information Return (AIR)’. The objective of SFT was to curb black money and widening the tax base.
Section 285BA of the Income Tax Act
The specified reporting entity/person must furnish a statement of financial transaction or reportable account as per Section 285BA of the Income Tax Act, 1961.
Rule 114E of the Income Tax Rules
To furnish a statement of financial transactions, specified forms are required to be submitted as per Rule 114E of Income Tax Rules, 1962 referred to as “Statement of Financial Transaction (SFT). Rule 114E of the Income Tax Rules, 1962 specifies that the statement of financial transaction to be furnished in Form No. 61A
Furnishing of Statement of Financial Transaction
As mentioned above, the statement of the financial transaction needs to be furnished in respect of a financial year in Form No. 61A under sub-section (1) of section 285BA of the Income Tax Act
Nature, Value and Person Responsible to Report a Specified Transaction
Section 285BA authorises the Central Board of Direct Taxes (CBDT) to prescribe different values with respect to different specified financial transactions in respect of different specified persons having regard to the nature of such transactions.
The same prescribed by CBDT via Rule 114E is given below:
SI. No | Nature of transaction to be reported | Monetary threshold of transaction | Specified person required to submit SFT |
1 |
| Aggregating to Rs.10 lakh or more in an FY | A banking company or co-operative bank to which the banking regulation applies. |
| Aggregating to Rs.10 lakh or more during the FY, | ||
| Aggregating to Rs.50 lakh or more in an FY | ||
2 | Cash deposits in one or more accounts other than a current account and time deposit of a person | Aggregating to Rs.10 lakh or more in an FY |
|
3 | One or more time deposits (other than renewed time deposit of another time deposit) of a person | Aggregating to Rs.10 lakh or more in an FY |
|
4 | Credit card payments made by any person either in cash or by any other mode in a FY. |
| A banking company or Co-operative bank to which Banking Regulation applies or any other company or institution issuing credit card |
5 | Receipt from any person for acquiring bonds or debentures issued by the company or institution (other than renewal) | Aggregating to Rs.10 lakh or more in an FY | A company or institution issuing bonds or debentures. |
6 | Receipt from any person for acquiring shares (including share application money) issued by the company | Aggregating to Rs.10 lakh or more in an FY | A company issuing shares |
7 | Buyback of shares from any person (other than the shares bought in the open market) | Aggregating to Rs.10 lakh or more in an FY | Listed company purchasing its own securities under Section 68 of the Companies Act, 2013 |
8 | Receipt from any person for acquiring units of one or more schemes of a mutual fund (other than transfer from one scheme to another) | Aggregating to Rs.10 lakh or more in an FY | A trustee of a mutual fund or any such other person authorised to manage the affairs of the mutual fund |
9 | Receipt from any person for sale of foreign currency including any credit of such currency to a foreign exchange card or expense in such currency through a debit or credit card or through the issue of travellers cheque or draft or any other instrument | Aggregating to Rs.10 lakh or more during an FY | Authorised person as referred to in Section 2(c) of the Foreign Exchange Management Act, 1999 |
10 | Purchase or sale of immovable property | Transaction value or valuation of stamp duty authority referred in Section 50C for an amount of Rs.30 lakh or more. | Inspector-General appointed under Section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act. |
11 | Cash receipt for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10) | Exceeding Rs.2 lakh | Any person who is liable for audit under section 44AB of the Act |
Forms to be Used for Furnishing SFT and the Procedure to Submit SFT
- New Registration and Generation of ITDREIN
- Login to income tax e filing portal >> Pending Action >> Reporting Portal >> Reporting Entities
- Select New Registration, Select the Form applicable and Category of the entity
- Complete the Entity Details in Form 61A or Form 61B and fill in the principal officer details with a digital signature
- After Submission of the form Principal Officer / Designated Director will get an email for the successful activation of ITDREN and the login credentials for the insights portal . If you have not got the password, then you can reset the password using forgot password.
2. Existing Registered Users or new users can log to insights portal user Principal Officer’s PAN
- Select the Form, ITDREN and,
- Download the Report Generation and Validation Utility (Form 61A / 61B / Other utilities) and prepare the reporting package using this utility.
- Go to Statement and proceed with uploading the XML file. Select the appropriate year and form and proceed with submission using the digital signature.
- Once Submitted and the return is processed, the Status will reflected for any error, Error report will be generated.
Due Date of Furnishing SFT
SFT in Form 61A shall be submitted on or before 31 May of the FY, immediately following the FY in which the transaction is recorded or registered.
Statement of reportable account in Form 61B shall be submitted by the prescribed reporting financial institution for every calendar year on or before 31 May of next year.
FAQs
What is Aggregation Rule?
All the accounts of the same nature as specified in column (2) of the above table maintained in respect of that person during the FY shall be taken into account.
For example: If Mr. Rajesh has two savings accounts of Rs. 5 lakh each, in order to check the monetary threshold of Rs. 10 lakh, the amount in both savings accounts needs to be aggregated.
2. All the transactions of the same nature as specified in column (2) of the above Table recorded in respect of that person during the FY shall be aggregated.
For example: If Mr. Rajesh has purchased shares for a value of Rs. 5 lakh in September in an FY and Rs. 6 lakh in November of the same FY, the value of both shares needs to be aggregated to check the monetary threshold of Rs. 10 lakh.
3. In a case where the account is maintained, or the transaction is recorded in the name of more than one person, like a joint account, attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons.
Special Provision for the Penalty in Case of Prescribed Reporting Financial Institution?
A penalty of Rs 50,000 will be levied on the prescribed reporting financial institution if it provides inaccurate information in the statement where:
- Inaccuracy is due to a failure to comply with the prescribed due diligence requirement or is deliberate on the part of that person or
- The person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable account but does not inform the prescribed income-tax authority or such other authority or agency; or
- The person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to inform and furnish correct information within 10 days, as mentioned above.