Special Financial Transaction (SFT) Reporting Parameters under Income Tax Act

Special Financial Transactions (SFT) Reporting Parameters.

Income Tax Department is widening its scope of disclosers and reporting day by day, there are some type of transactions on which Income Tax Department is very aggressive these days, and if any person entered in such transaction without any valid source then he can be caught in great difficulties in the times to come. Theses transactions are known as Special Financial Transaction (SFT Reporting) in the Income Tax Act perspective.

So, one must be very careful while entering into such type of transactions. Govt has put the obligation on the banks, property registrar etc.  to report such transactions to the Income Tax Authorized along with the details of person carried out these transactions, for example, if a person buys an Immovable property for Rs. 30 Lac or more then it is the duty of registrar to provide the details of this transaction to the Income Tax Department along with details Pan number and value of property and the moment this information comes to the Income Tax Department, they show this transaction in to the Form 26AS of buyer and waits for the Income Tax Returns of the buyer that what treatment he will give in his Income Tax Return, and if the department satisfied with the treatment given in the ITR then it will ok with them otherwise they can send notice and ask the entire details regarding the transaction.

Given below are the codes and the parameters on which reporting will be given to the Income Tax Department by the respective authorities:

Code Description & Parameters:

1. SFT-001: Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to ten lakh rupees or more in a financial year.

2. SFT-002: Payments made in cash aggregating to ten lakh rupees or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007).

3. SFT-003A: Cash deposits aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person.

4. SFT-003B: – Cash withdrawals (including through bearer’s cheque) aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person.

5. SFT-004: Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.

6. SFT-005: One or more-time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to ten lakh rupees or more in a financial year of a person.
7. SFT-006: Payments made by any person of an amount aggregating to (i) One lakh rupees or more in cash; or (ii) Ten lakh rupees or more by any other mode, against bills raised in respect of one or more credit cards issued to that person, in a financial year.

8. SFT-007: Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company).

9. SFT-008: Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring shares (including share application money) issued by the company.

10. SFT-009 Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to ten lakh rupees or more in a financial year.

11. SFT-010: Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring units of one or more schemes of a Mutual Fund (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund).

12. SFT-011 Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of traveller’s cheque or draft or any other instrument of an amount aggregating to ten lakh rupees or more during a financial year.
13. SFT-012 Purchase or sale by any person of immovable property for an amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50C of the Act at thirty lakh rupees or more.

14. SFT-013 Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10 of Rule 114E)

15. SFT-014 Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to (i) twelve lakh fifty thousand rupees or more, in one or more current account of a person; or (ii) two lakh fifty thousand rupees or more, in one or more accounts (other than a current account) of a person. Cash deposits during the period 1st April, 2016 to 9th November, 2016 in respect of accounts that are reportable.

So, if you are planning to enter any of the above transactions then be very careful regarding the Income tax Impact, they will bear.