BACKGROUND

1. Under the Annual Information Return (AIR) Scheme, Specified Entities were required to report Notified Transactions to Income Tax Department.

2. Section 285BA of Income Tax Act 1961 read with rule 114E of Income Tax Act 1962 w.e.f 01.04.2015 makes it mandatory for specified reporting persons to furnish statement of financial transactions electronically.

WHO ARE SPECIFIED ENTITIES

As per Section 285BA (1) specified entity means 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 recognised 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; or

l) a person, other than those referred to in clauses (a) to (k), as may be prescribed

Who is responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any reportable account.

WHAT ARE SPECIFIED FINANCIAL TRANSACTION

As per section 285BA (3) following transaction are notified as specified financial transaction

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

b) transaction for rendering any service; or

c) transaction under a works contract; or

d) transaction by way of an investment made or an expenditure incurred; or

e) transaction for taking or accepting any loan or deposit,

WHO IS REQUIRED TO FILE STATEMENT OF FINANCIAL TRANSACTIONS (SFT)

As per rule 114E following persons (reporting persons) are required to furnish statement of financial transaction

a) Any person who is liable for audit under section 44AB of the Income –tax Act

b) A Banking Company

c) A Co-operative Bank

d) Post Master General of Post office

e) A Nidhi referred to in sec 406 of the Companies Act 2013

f) A Non-banking Financial Company (NBFC)

g) Any Institution issuing Credit Card

h) A Company or Institution issuing bonds or debentures

i) A Company issuing shares

j) A company listed on a recognised stock exchange purchasing its own securities

k) A Trustee of a Mutual Fund or such other person authorized by the trustee

l) Authorized Dealer, Money Changer, Off-shore Banking Unit or any other person defined in FEMA, 1999

m) Inspector-General or Sub-Registrar appointed under Registration Act, 1908

NATURE AND VALUE OF TRANSACTION WHICH IS REQUIRED TO BE REPORTED BY REPORTING PERSONS

As per Rule 114E following transaction are required to be reported in respect of all the transactions of the nature and value specified

Sr. No. Reporting Person Nature of Transaction Value of Transaction
1 A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque aggregating to Rs. 10 Lack or more in a financial year
Payments made in cash 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) aggregating to Rs. 10 Lack or more in a financial year
Cash deposits or cash withdrawals (including through bearer’s cheque) in or from one or more current account of a person. aggregating to Rs. 50 Lack or more in a financial year
2 i. A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies

ii. Post Master General

Cash deposits in one or more accounts (other than a current account and time deposit) of a person. aggregating to Rs. 10 Lack or more in a financial year
3 i.  A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies;

ii. Post Master General;

iii. Nidhi  Companies

iv. Non-banking financial company

One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to Rs. 10 Lack or more in a financial year
4 i.  A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies;

ii. any other company or institution issuing credit card

Payments made by any person in cash

Payments made by any person by any other mode, against bills raised in respect of one or more credit cards issued to that person, in a financial year.

Amount aggregating to Rs. 1 Lack or more in a financial year

Amount aggregating to Rs. 10 Lack or more in a financial year

5 company or institution issuing bonds or debentures Receipt from any person 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). Amount aggregating to Rs. 10 Lack or more in a financial year
6 company issuing shares Receipt from any person for acquiring shares (including share application money) issued by the company. Amount aggregating to Rs. 10 Lack or more in a financial year
7 company listed on a recognised stock exchange purchasing its own securities Buy back of shares from any person (other than the shares bought in the open market) Amount aggregating to Rs. 10 Lack or more in a financial year
8 trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf Receipt from any person 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). Amount aggregating to Rs. 10 Lack or more in a financial year
9 Authorised person as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999) 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 travellers cheque or draft or any other instrument Amount aggregating to Rs. 10 Lack or more in a financial year
10 Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act. Purchase or sale by any person of immovable property an amount of Rs. 30 Lack or more or valued by the stamp valuation authority referred to in section 50C of the Act at Rs. 30 Lack or more.
11 Any person who is liable for audit under section 44AB of the Act Receipt of cash payment for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10 if any.) exceeding Rs. 2 Lack

Aggregation Rule: Aggregation rule needs to be applied for specified transaction types to identify transactions/persons/accounts which are reportable.

Rule 114E specifies that the reporting person shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person –

(a) take into account all the accounts of the same nature maintained in respect of that person during the financial year;

(b) aggregate all the transactions of the same nature recorded in respect of that person during the financial year;

(c) attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons, in a case where the account is maintained or transaction is recorded in the name of more than one person;

The aggregation rule is applicable for all transaction types except Purchase or sale of immovable property and Cash payment for goods and services

RETURN DUE DATE

a. Online return in Form No. 61A with digital signature has to be furnished before 31st of May, immediately following the financial year in which such transaction is recorded

b. The tax authorities can issue notice to a person who is required to furnish a return as mentioned above and who has not filled the return within prescribed time, requiring person to furnish the return within a period not exceeding 30 days from the date of service of notice [Section 285BA(5)]

DEFECTIVE RETURN & RECTIFICATION

a) Where the tax authorities considers that the return furnished under sub section 1 of section 285BA is defective, he may intimate

    • the defect to the person who has furnished the return
    • give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or within such further period which, on an application made in this behalf the said income-tax authority may, in his discretion, allow.

b) If the defect is not rectified within the said period then, the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement

c) If any person comes to know or discovers any inaccuracy in the information provided in the return, he shall within a period of ten days inform the income-tax authority the inaccuracy in such statement and furnish the correct information [Section 285BA(6)]

PENALTY

a) Failure to furnish statement of financial transaction or reportable account will attract a penalty under section 271FA at the rate of Rs. 100 for every day during which such failure continues 

b) If any person to whom notice was given under section 285BA (5) (as discussed above) fails to file the return within the specified time then a penalty of Rs. 500 for every day for which the failure continues may be levied. Such penalty may be levied from the day immediately following the day on which the time specified in such notice for furnishing the return expires.

c) As per section 271FAA of the Income-tax Act, if a person who is required to furnish statement of financial transaction or reportable account, provides inaccurate information in the statement, and where:

  • the inaccuracy is due to a failure to comply with the due diligence requirement prescribed under section 285BA(7) or is deliberate on the part of that person;
  • the person knows of the inaccuracy at the time of furnishing the statement but does not inform the prescribed income-tax authority or such other authority or agency;
  • the person discovers the inaccuracy after the statement is furnished and fails to inform and furnish correct information within a period of 10 days as specified under section 285BA(6),

Then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of Rs. 50,000/

IS IT MANDATORY TO FILE THE NIL SFT RETURN

When we go through various circulars / notification issued by Income tax department and on reading of Section 285BA and rule 114E no where they have mentioned to file the NIL SFT statements.

Also As per the press release dated 26.05.2017 for clarification regarding generating of ITDRN it is clearly mention that The registration of reporting person (ITDREIN registration) is mandatory only when at least one of the Transaction Type is reportable.”

Considering above facts we can say that it is not mandatory to file the NIL SFT statements. But as on preliminary response page there is a option in drop down of NIL Transaction, it is advisable to be on safer side and always file preliminary response for NIL statements also.

TRANSACTION TYPES

Following are the transaction types under SFT:

  • SFT- 001: Purchase of bank drafts or pay orders in cash
  • SFT- 002: Purchase of pre-paid instruments in cash
  • SFT- 003: Cash deposit in current account
  • SFT- 004: Cash deposit in account other than current account
  • SFT- 005: Time deposit
  • SFT- 006: Payment for credit card
  • SFT- 007: Purchase of debentures
  • SFT- 008: Purchase of shares
  • SFT- 009: Buy back of shares
  • SFT- 010: Purchase of mutual fund units
  • SFT- 011: Purchase of foreign currency
  • SFT- 012: Purchase or sale of immovable property
  • SFT- 013: Cash payment for goods and services
  • SFT- 014: Cash deposits during specified period (9th Nov to 30th Dec, 2016).

Reporting person / entity is required to furnish separate Form 61A for each transaction type.

FORM 61A

Form 61A has four parts which are divided into common information (Part A) and report level information (Part B to Part D).

FORM 61A - Parts

Author Bio

Qualification: CA in Practice
Company: VDA & Associates
Location: Pune, Maharashtra, IN
Member Since: 29 May 2020 | Total Posts: 3
CA Ajay Naval, Partner at VDA & Associates, Pune View Full Profile

My Published Posts

More Under Income Tax

14 Comments

  1. PK AGARWAL says:

    In my F26AS, SFT-005 Time deposit amount is shown which was credited from my foreign account to NRE account as I was NRI. Please advice if I need to do anything while filing return since this is supposed to be tax free.

  2. Raju says:

    Sir,
    I purchased shop @ 33.00 lacs and shown in SFT- 012: Purchase or sale of immovable property. kindly advise us is it taxable and where to shown in ITR return.
    regards

  3. Dolly Moga says:

    Sir, in my ITR of 2018-19 & 19-20 two entries of 17 lac & 10.79 lac are reflecting in column E under SFT-005 for Time deposits on which TDS has been duly deducted by bank and tax paid in due course. Now, what I need to do?
    This amount was transferred to my bank account by my NRI children from their NRO account.
    Kindly guide.
    Thanks and regards
    Dolly Moga

  4. Bhuwanesh says:

    Sir, there is an entry of 578000 under sft005, i dont have any clue where it came from, and why it is showing. As I don’t have any knowledge about that transaction. What should I do pls guide

  5. BHAGWANT says:

    AN AMOUNT OF RS.12,500/- IS SHOWN AS SFT009 FOR BUY BACK OF SHARES. WHAT DO I DO.
    IS IT TO BE INCLUDED IN INCOME TAX BY ME. DI I HAVE TO DEDUCT COST OF ACQUISITION. IS IT NECESSARY TO REPORT BY ME IN RETURN.
    WHAT IS THE MINIMUM AND MAXIMUM LIMIT FOR REPORTING. PLEASE CLARIFY.
    REGARDS,
    BHAGWANT

  6. Ravinder Kumar Juneja says:

    Sir,
    Due income tax on FD is being deducted by the bank at the time of renewal.
    Then why it is being shown in Part (E) of Form 26AS/SFT 005. It makes us worried to see this transaction. Please advise what action need to be taken in this regard..

  7. Sanjay says:

    Hi dear,
    in my 26AS, SFT-011 Purchase of Foreign Currency shown for Rs. 56,100.
    1. What I need to do? Do I have to file 61A as an individual?
    2. Is it required to mention anywhere in ITR-2.
    Thx & Rgds

  8. Sanjay says:

    Hi dear,
    in my 26AS, SFT-011 Purchase of Foreign Currency shown for Rs. 56,100. What I need to do and is it required to mention anywhere in ITR-2

  9. vishwamber k says:

    There is an SFT-003 entry in my form 26AS for an amount of Rs 7,00,000 & Rs.3,63,80,020. I want to know what all I need to do for it while filing my ITR or anywhere else?

  10. Preeti says:

    There is an SFT-005 entry in my form 26AS for an amount of Rs 38,00,000. I want to know what all I need to do for it while filing my ITR or anywhere else?

    1. ajay.naval says:

      Dear Preei Ma’am,

      SFT 005 is for Time deposit, if you had made any Fixed Deposit with any Bank please make sure that you are offering Interest on it in your Income Tax Return, In case of any query please mail me

  11. Ravinder Reddy says:

    Hi sir,
    I paid credit card bill last F.Y 33 lakhs but my income 3.5 lakhs only. my friend use for business purpose my card now my 26 as showing under SFT Transction how can file this returns

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

October 2020
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031