Paid or distributed Dividend? File Statement of financial transactions by 30th June

Are you a company which has paid or declared dividend?

If you are, then you need to file Statement Of Financial Transactions (SFT) for reporting such payment/distribution of dividend for the first time.

CBDT has expanded the scope of Statement of financial transactions (SFT) vide Notification No. 16/2021, dated 12-03-2021. By virtue of such notification any company which has paid/distributed/declared dividend during financial year 2020-21 needs to file information of such payment/distribution in SFT by 30^th June’2021.

It is important to note that such information for payment of dividend was not required to be filed earlier.

In this article we will highlight who, when and how needs to file such SFT in respect of Dividend.

First of all, we should understand who is required to file SFT for dividend?

The answer to the above question is all companies which have paid/distributed dividend are required to file statement of financial transactions (SFT) for reporting information of such distribution/payment of dividend.

Q.1 What is the purpose of filing SFT?

Ans. The Govt. in its endeavor to make return filing process easy and ensuring pre-filled data in the IT Return has made it compulsory to file information of such dividend payment.

The data filed through this SFT will be pre-filled in the ITR form of the persons receiving such dividend also the same will be available for viewing in annual information system (Form 26AS) of such person.

Q.2 By when is SFT for dividend required to be filed?

Ans. The last date for filing such statement is 30^th June’2021. Such statement will be filed annually. A company needs to file such statement by 30.06.2021 in respect of FY 2020-21. Thereafter such SFT will be filed every year by the due date in respect of each FY.

Q.3 Is there any limit above which SFT for dividend is to be filed.

Ans. There is no threshold limit for filing SFT for dividend. Therefore, Dividend payment of any amount must be reported through SFT.

Q.4 What type of dividend needs to be reported in SFT?

Ans. Dividend whether final or Interim paid or distributed is to be reported through SFT. Moreover, even deemed dividend under section 2(22)(e) must be reported in such statement of financial transactions.

Q.5 Where can we file SFT?

Ans. SFT can be filed on the new reporting portal Income Tax Department | Reporting Portal | Project Insight

Q.6 What is the procedure for filing SFT?

• First step for filing SFT is to generate a new registration on the reporting portal with a login and password.
• SFT will be filed in form 61A on the portal.
• For filing SFT on the reporting portal you need to need first generate ITDREIN on the reporting portal.
•  ITDREIN will be generated in the name of the authorized officer/director of the company.
• PAN and other details of the entity as well as authorized person or principal officer need to be provided for generating ITDREIN.
• On successful generation, you will receive ITDREIN on mail along with login ID and temporary password which can be changed on first login.
• This login will be used for filing SFT on the portal.
• After login, download template for preparing data for SFT.
• Prepare data in the Utility by feeding data or pasting of data into utility.
• The file once prepared needs to be validated for errors. Once the file is error free a (.txt) file will be generated which can be saved in a folder.
• Download the ‘Dividend and Interest generic submission utility’.
• This utility is used to generate and sign final file for uploading the SFT.
• Insert Digital signatures sign and generate the .tar.gz file for uploading.
• Upload the file on the portal after login.
• After uploading, the SFT report file will be verified for errors and will be checked for errors/ valid digital signatures and will be accepted or rejected.
• In case of any error, complete file will be rejected and the rejection reason(s) can be viewed by clicking ‘Rejected’ link under status column. User need to correct the relevant error(s) and upload the file again.
• If accepted, the filing will be complete, and you will receive an acknowledgement through mail.

Other points to be noted:

Where the reporting person is a non-resident, the statement may be signed, verified and furnished by a person who holds a valid power of attorney from such Designated Director.

A correction /deletion statement can be filed in case any errors are found in the SFT filed by the company.

One report would include details of dividend payment to one person.

In case of non-furnishing of SFT within due date, the prescribed income-tax authority may serve notice upon such person requiring him to furnish SFT within a period not exceeding 30 days from the date of service of such notice and he shall furnish the statement within the time specified in the notice.

Penalty of Rs 500 per day from the expiry of original due date till due date mentioned in the notice and Rs 1,000 per day beyond the due date specified in the notice can be levied in case of non-filing of this statement..

(The author a Chartered Accountant and can be contacted at capratikanand@gmail.com or Mobile: +91-9953199493)