Explore the essentials of Statement of Financial Transactions (SFT) under the Income Tax Act in India. Understand its meaning, who needs to file, the due date, associated penalties, and the designated forms (Form 61A / Form 61B). Ensure compliance to avoid penalties.

Introduction:

The Statement of Financial Transactions (SFT) is a crucial aspect of Income Tax compliance in India. This article delves into the meaning of SFT, the individuals or entities required to file, the due date for filing, associated penalties, and the specific forms involved.

What is SFT?

SFT stands for Statement of Financial Transactions. It is a report of specified financial transactions by specified persons. The Govt has updated Form 26AS to include SFT. It allows the Govt to keep track of high value transactions.

Specified Persons  as per Section 285BA of the Income Tax Act,1961 includes:

Any person being-

1. An assessee, or

2. prescribed person in case of an office of Government, or

3.  a local authority or other public body or association; or

4. the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908); or

5. the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988) ; or

6. the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898) ; or

7. the recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; or

8. an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934) ; or

9. a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996) ; or

10. a prescribed reporting financial institution, or

11. any other person as may be prescribed.

Specified Financial Transactions as per the Income Tax Act,1961 means any:

1. transaction of purchase, sale or exchange of goods or property or right or interest in a property; or

2. transaction for rendering any service; or

3. transaction under a works contract; or

4. transaction by way of an investment made or an expenditure incurred; or

5. transaction for taking or accepting any loan or deposit,

Due date for filing SFT: On or before 31 May  of the FY, immediately following the FY in which the transaction is recorded or registered.

Penalty if not filed within due date: Penalty u/s 271FA of INR 500 per day shall be levied for initial failure to file within due date and Rs 1,000 per day beyond the due date specified in the notice.

Form for filing SFT:  Form 61A / Form 61B (for prescribed reporting financial institution).

Conclusion:

In conclusion, adherence to SFT regulations is crucial for individuals and entities involved in specified financial transactions. Understanding the meaning, filing requirements, due dates, and potential penalties ensures compliance with the Income Tax Act. Form 61A and Form 61B are the designated forms for submitting these reports, and timely filing is essential to avoid penalties.

Author Bio

Qualification: Student - CA/CS/CMA
Company: BDO
Location: Varanasi, Uttar Pradesh, India
Member Since: 15 Nov 2023 | Total Posts: 1

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