Section 285BA of Income-tax Act, 1961 deals with Obligation to furnish statement of financial transaction or report able account and rule 114E of Income Tax Rules deals with Furnishing of statement of financial transaction (SFT). Due date to Furnish such statement for Financial Year 2018- 19 is 31st May 2019.
Now days a question is coming to the mind of many professional that in case of an entity who has not entered into any of the Specified or report able financial transactions in Financial Year 2017-18 but who falls into the class of person (reporting person) under Section 285BA Read with Rule 114E of Income Tax Rules, are they required to file NIL statement of financial transactions (SFT) in Form No. 61A.
Some of the persons are of the opinion that Nil Statement is required to be filed while others are of the opinion that Nil Statement is not required to be filed in Form no. 61A.
In this regard we have studied Rule, Section, User Guide, Notifications issued by Income Tax Department and also referred related articles, news etc on the subject to come to a conclusion. Our Study finding is as follows :-
1. Statement of Financial Transaction (SFT) Report Generation Utility User Guide- Version 2.0 (May 2017)
At Page 17 of the guide in Point No. 7.4 we found that Report Utility provides the option of preparation of NIL Statement but it nowhere talks of Compulsion to file Nil statement. Extract of the same is as follows:-
“ 7.4 Preparation of NIL Statement
Utility allows user to generate SFT (XML) with no financial transactions in it. This functionality is useful when Reporting Entity has no financial transaction to report.
1. Fill required information in Statement (Part A) and select ND (No Data) from Statement Type drop down field.
2. Save XML to desired location on machine.”
2. Precedent – Annual information return (AIR) are been replaced by Statement of Financial Transactions (SFT) with effect from financial year 2016- 17. In– Annual information return filing regime return was required to be filed only if there was a report able transaction in the relevant year and Nil return was not required to be filed.
3. Relevant Extract of Section 285BA and Rule 114E
Extract of Income Tax Rule 114E
114E. (1) The statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in respect of a financial year in Form No. 61A and shall be verified in the manner indicated therein.
(2) The statement referred to in sub-rule (1) shall be furnished by every person mentioned in column (3) of the Table below in respect of all the transactions of the nature and value specified in the corresponding entry in column (2) of the said Table in accordance with the provisions of sub-rule (3), which are registered or recorded by him on or after the 1st day of April, 2016.
Relevant Extract of Section 285BA
285BA. (1) Any person, being—
(a) an assessee; or
(b) the prescribed person in the case of an office of Government; or
(c) a local authority or other public body or association; or
(d) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908); or
(e) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988) ; or
(f) the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898) ; or
(g) the Collector referred to in clause (g) of section 3 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013) ; or
(h) the recognized stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; or
(i) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934); or
(j) a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996) ; or
(k) a prescribed reporting financial institution,
who is responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any report able account as may be prescribed, under any law for the time being in force, shall furnish a statement in respect of such specified financial transaction or such report able account which is registered or recorded or maintained by him and information relating to which is relevant and required for the purposes of this Act, to the income-tax authority or such other authority or agency as may be prescribed.
4. As per Section 285BA out of the specified persons a person responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any report able account, shall furnish a statement in respect of such specified financial transaction or such report able account which is registered or recorded or maintained by him and information relating to which is relevant and required for the purposes of this Act, to the income-tax authority or such other authority or agency as may be prescribed.
Key Points emerging from Section 285BA
Report in form No. 61A in respect of specified Transaction is required to be submitted only if such books of accounts or other document contains a record of any specified financial transaction or any report able account. So in case there is no specified financial transaction or any report able account than Report in form No. 61A is not required to be submitted.
Section does not specifically mandate filing of nil statement.
5. As per Rule 114E statement in Form No 61A shall be furnished by specified persons in respect of all the specified transactions registered or recorded by such specified persons on or after the 1st day of April, 2016.
Key Points emerging from Rule 114E
Statement in Form 61A not required to be filed by such specified persons in the absence of any specified Transactions.
Rule 114E do not specifically mandate filing of nil statement.
6. In addition to above I have also gone through following notifications/ Circulars / PPT Issued by Department related to Specified financial Transactions and not found anything which suggest mandatory filing of NIL Statement in respect of Specified Financial Transaction (SFT) in form No. 61A-
7. We have also gone through various articles published on our website from time to time and not found anything in those articles which suggests mandatory filing of NIL Return in respect of Specified Financial Transaction (SFT) in form No. 61A-
8. Further CBDT has released a Press Release on 26/05/2017 which says that The registration of reporting person (ITDREIN registration) is mandatory only when at least one of the Transaction Type is reportable in other words Form 61A is required to be submitted only if there is at least one reportable transaction.
9. CBDT has also clarified on Page No. 5 of Reporting Portal -Frequently Asked Questions (FAQs)-Version 2.0 (April 2018) that it is not Mandatory to file NIL Statement. However it is advisable to submit ‘SFT Preliminary Response’.
Conclusion– In our view filing of Nil Statement in form No. 61A is not mandatory under section 285BA read with rule 114E but to be on safer side Assessee may consider filing such return. Further to maintain consistency Assessee who has filed Annual Information Return for Financial Year 2017-18 may consider filing such return for financial year 2018-19 too despite no specified transaction in Financial Year 2018-19.
Republished with Amendments.
Author Bio
Sir,
Very good article..could you please clarify on the following —
Is this statement applicable for RE-INVESTMENT BY RENEWAL of existing Postal / Bank deposits ?
Is Postal Department suppose to file this return for NSC / KVP investments above Rs.10L during the year —FRESH & RENEWAL INVESTMENTS
How to deregister from SFT
In FY 2016-17 i have sold out a property and received an account payee cheque for 16,00,000. However i withdraw the entire amount in cash and deposit the entire amount in one more bank account.So do i need to file Form 61A for the FY 2016-17.
can any one suggest me for that, filing NIL return SFT after due date will lead to penalty or not?
HOW TO FILE PRELIMINARY RESPONSE
Directorate of Income Tax (Systems)
Reporting Portal Frequently Asked Questions (FAQs) Version 2.0 (April 2018)
1. Overview
2. Reporting Obligation 1. Who is a Reporting Entity? Reporting Entity or
Reporting Person is an entity which is required to furnish a Statement of
Financial Transaction (in Form 61 A) or Statement of Reportable Account
(in Form 61B) with the Income tax Department as per the provisions of
section 285BA of the Income-tax Act 1961. Also, Under Rule 114D of IT
rules 1962, any entity/person receiving Form 60 is required to report details
of Form 60 in Form 61.
3. What are the Reporting Obligations u/s 285BA of the IT Act? Under the
Annual Information Return (AIR) Scheme, which was introduced w.e.f.
01-04-2004, specified entities were required to report notified transactions to
ITD. Section 285BA of the IT Act was amended w.e.f. 01-04-2015, and it
now requires specified persons to furnish Statement of Financial Transaction
or reportable account. Under Rule 114D of IT rules 1962, details of Form 60
are required to be reported in Form 61. Rule 114E mentions the nature and
value of transactions which are required to be reported. Rules 114F, 114G
and 114H deal with due diligence procedure for identification and reporting
of reportable accounts.
4. Is it Mandatory to file NIL Statement? No. However it is advisable to
submit ‘SFT Preliminary Response’.
In my opinion the matter is still very controversial.
Nice article. Thanks.
But for those who are required to report (file 61A) it is a nightmare. It gets diverted to a Reporting Portal which ridiculously is a beta version and has not been responding since last several hours.
very useful article and thanks
Read. Thanks.
Very useful article
If a NBFC is not issuing any share, debentures, or bonds then weather the company is reportable under point no SFT-007 and SFT-008??
and what option to select there
Not Applicable,
Nil Transcation.??
Thanks for this very useful and relevant thread. I would like to contribute something extra on the issue, CBDT has issued a circular after this thread was posted, it was issued on 26/05/2017 ( Link: pib.nic.in/newsite/PrintRelease.aspx?relid=162147 )
I would like to quote from the circular:
“The registration of reporting person (ITDREIN registration) is mandatory only when at least one of the Transaction Type is reportable. A functionality “SFT Preliminary Response” has been provided on the e-Filing portal for the reporting persons to indicate that a specified transaction type is not reportable for the year.”
From this it is clear that the department wants us to mandatorily file the Preliminary response as Not applicable or Not transacted. The SFT response (not preliminary) has to be filed only when reportable transaction arises.
I know this is a bit late to be able to help in this year’s compliance but I hope it clarifies any future doubts that may arise.
Sir my busiess accounts comes under 44AB. I have a query that I had more than 50 LAKH cash deposit Bank OD account towards cash sales amount for the year 2016-17.(All cash bills are below 2 Lakh.only.) Do i need to file SFT? If yes than what particulars I have to file, whether transactionwise details or lumpsum amount details or party wise details I have to submit. Thanks
File the Preliminary Response sheet without ITDREIN no in case of Nil report
OFFHAND
The write-up says, and also, some comments are to the effect that in order to play safe, filing of a statement of ‘nil’ transaction is advisable. In offering such a suggestion, reference has been made to on the fact that the portal provides for, so as to accommodate, a “ STF preliminary response”.
Such reference is presumably wrt the portion of the CBDT ‘s clarification, which reads:
“The registration of reporting person (ITDREIN registration) IS MANDATORY ONLY WHEN AT LEAST ONE OF THE TRANSACTION TYPE IS REPORTABLE. A functionality “SFT Preliminary Response” has been provided on the e-Filing portal for the reporting persons TO INDICATE THAT A SPECIFIED TRANSACTION TYPE IS NOT REPORTABLE FOR THE YEAR.” (FONT supplied)
As per own reading, the purport and import of the words highlighted above, are seen to make it clear that a “SFT preliminary response” calls for compliance not by all, but only if a reporting person has at least one of the reportable types of transaction (s).
Be that as it may, now that an attempt has been made to create some confusion, unwarranted though, in one’s conviction, the CBDT, in its own interests, if so considered and found fit, with a view to nipping in the bud and setting at rest any such controversy, make it explicit and abundantly clear.
in case of audit under section 44ad but no other transaction as specified is it necessary to file 61A?
Well explaining article.
Further to add this, Now separate Form 61A is required to file for each specified transactions individually.
We at GAIL INDIA LTD filed 5 Form 61A for Nil transactions of Five Nature SFT applicable to Corporates- viz. Bonds & adventures, issuing shares, buyback of shares, Receipts and Payments SGT.
Regards,
Vinod Kumar
DY.MANAGER (TAXATION)
GAIL
If Nil report not filed, the department presumed that the Form 61A is not filed and issue notice. Hence Nil report is to be filed
The language of Rule 114E suggests that all the persons listed in col.3 of the Table are required to file SFT in respect of transactions in col.2.Thus the requirement to file SFT is there on the basis of status of the person (col.3) and is not dependent on outcome of col.2.
On the other hand , objections are right that what the deptt. will do with useless data.
Till the provision is suitably amended , we have to put up with shabbily drafted law.
The safest course is to file Preliminary response showing NIL txn. That will be sufficient and reasonable cause for avoiding penalty if any.
I am uploading the Form 61A Zip file but while uploding it shows Invaild ZIP file. Please upload the valid Zip file. Please tell me the solution of this
in filling of form no 61A how to respond thefollowing
Statement NO, ORGINAL statement ID, NO of
reports
Very timely information posted on your website. Your analysis is helpful in removing cobwebs on the twisted language used in the Act and Rules.
Sir
I have generated SFT xml while uploading in IT efiling portal , when uploaded the comment received is DSC is not registerd or expiry DSc pls.help me to upload the file
Dear Sir
Please tell if a person liable for audit under sec 44ab has to submit statement of financial transaction under followin point:
If there is a receipt of more than 2 lac in fy 2016-17 ( whole financial year) or single receipt of 2 lack or more in a single day?
I think if we are not dealing in cash at all to run our business then
we don’t need to submit form 61 A
In “SFT preliminary response” page on IT website they have mentioned following details.
1) Transaction Type (Various transaction types are mentioned)
2) Reportable transactions (Values = Yes, No, Not Applicable)
In the “Note” section below they have mentioned
1) to select “Yes” if there are reportable transactions
2) to select “No” if transaction type is applicable but no reportable transactions
3) to select “Not Applicable” if Transaction type is not applicable
The main issue here is the “Transaction type” SFT-013: Cash payment for goods and services
Now if in your business activity you are not at all dealing with cash then the Transaction Type is not applicable to you. If You are dealing with cash then the transaction type will be applicable but you may not have reportable transactions, then select “No” and submit the form 61A with “No-Data”.
But I also feel that Transaction Type “SFT-013” includes Rs 2 lk limit and the audit case, they have
not mentioned it there because they can’t put such a long line there.
So revised Transaction type could be “More then 2 lakh Cash payment for goods and services by those whom 44ab tax audit is applicable”, then you can safely select “Not applicable” even if you deal with cash to run your business.
Good analysis CA Sandeep.
I think preliminary response at assessee’s login is sufficient for no reportable specified transactions.
GREAT EFFORTS AND GOOD ANALAYSIS
In case an individual have turnover less than 1 crore but he get his accounts audited due to retain profit < 8% or 6% and than Is he in obligation to report the financial transaction.
Please confirm what is the statement number and statement ID under preparation of Form61A for generating the XML File for NIL 61A filing
A very good effort by Shri Sandeep
An analytical view of sec 285BA
Moreover the last date specified in this regard is too early since compliance need to be done C As
only. Thank you for your views
Sir, the comments given by you are the same which the Professionals as on date have.
Further its has been ended by stating that to be on safer side it shud be filed. Sir, this is what exactly every professional is feeling as on date.
However, it was a nice article sir.
If nil statement is not required, why then preliminary response is sought from every tax payer. It would be better if FAQ by CBDT and being the first year for general tax payers extension of time may be given
I think ‘suggesting’ here means that efiling website is not accepting response as ‘NO’ unless IRDREIN is generated.
form 61A requires the original statement ID. When we have no statement to file, what is the ID? cannot validate the nil return
Since Report Utility provides the option of preparation of NIL Statement, with a view to avoid the department coming out with notice for non- filing of 61A at a later date after a long period, proposing the penalty (just as it happened in TDS returns filing), it may be advisable to file the NIL return on or before due date.
It is better on the part of the department to come out with clarification in this regard.
In my opinion it is reporting of Specified Transactions. When there is no specified transaction liable to be reported, NO need to furnish NIL statement.
Greta Efforts.
Still, it is a grey area.
In my opinion, Filing of SFT (form-61A) is mandatory, even if there is NIL / NO re portable transactions happened during F.Y.2016-17. Reason is that I.Tax authority will not know unless your filing of SFT and other reason is that Principal Officer filing SFT with DSC , so in case if any goes contrary to submission , IT dept will take action against Principal Office for wrong / inaccurate submission.
Respected Experts!
in respect of Sl. # 11 of Rule 114E ( receipt of cash on sale of goods and service), which of the following need to be reported:
1) 2 invoice of Rs. 1.50.000 each have been collected in cash.
2) 1 invoice of Rs. 3,00,000 is realised in cash at 3 different dates.
3) 1 invoice of Rs. 3,00,000 is realised half in cash and half through cheque.
The notification came in December said the transaction need not be aggregated. But my doubt still remains , is it the Sale invoice or the total Receipt per day from a party which is intended as “the transaction”.
Any Reference or citations would be really helpful.
WHEN NOT PROVIDED FOR EXPRESSLY IN THE SECTION, WHY TO FILE NIL STATEMENT ?
As per the department letter I think we should send response as ‘NOt APPLICABLE / NO ‘ through ‘ STF preliminary response’ under compliance section post log in to efiling portal.
Sir,
What about Preliminary Response under “Compliance” at E-filing ?
44AB Assessee not having any Specified Financial Transactions (SFT) can submit Preliminary Response with type “Not Applicable”.
My Query is is “Preliminary Response” is sufficient for NIL SFT ??
Thanks for the analysis.
In case of no transactions Income Tax is suggesting to file a preliminary response of SFT at income tax website.