Statement of Financial Transactions Sec 285BA of Income Tax Act, 1961

Statement of Financial Transaction (SFT)

I. Introduction

In order to keep a track of the high value transactions undertaken by the taxpayers, a new Form 61A under Sec 285BA was introduced w.e.f 1^st April, 2004 vide Notification No. 182/2005, dated 11/07/2005.

This section required reporting persons to furnish Annual Information Return (AIR) in respect of specific financial transactions registered or recorded by them from the F.Y. 2004-05.

The Finance Act, 2014 amended Sec 285BA w.e.f. 1^st April, 2015 whereby AIR had been renamed to SFT (Statement of Financial Transactions or reportable accounts).

II. Basic Provisions under Income Tax Act, 1961 and Income Tax Rules, 1962

The provisions of Sec 285BA and Rule 114E are applicable to the specified transactions required to be reported.

Sec 285BA read with Rule 114E of the Income Tax Rules, 1962 specifies threshold limit, relating to the reporting entities, upon which the statement of financial transaction is required to be furnished in Form No. 61A.

III. Applicability

The class of persons, nature and value of transactions required to be reported as per Rule 114E are given as follows-

TYPE OF TRANSACTION:		AMOUNT AGGREGATING TO:	TYPE OF PAYMENT:
A.	Banking Company or cooperative Bank
	1.Purchase of : Bank Draft Pay order Banker’s Cheque Pre-paid instruments issued by RBI	Rs. 10 lakhs or more	In Cash
	2. Deposits in 1 or more accounts of one person (except Current account/ time deposit)	Rs. 50 lakhs or more
B.	Banking Company/ Cooperative Bank/ Any other Company or Institution issuing Credit Card
	Payments received from any person (against one or more credit cards)	Rs. 1 lakh or more	In Cash
		Rs. 10 lakh or more	Any other mode (except cash)
C.	Banking company/ Post Master General
	1. Deposits in 1/more accounts of a person (except Current account/time deposit)	Rs. 10 lakhs or more	In Cash
	2. 1/more Time deposits of a person (other than by way of renewal)*		N.A.
	*Reporting person in point 2 shall include Nidhi company and NBFC as well (apart from Banking co/Post Master general)
	3. Deposits during 9th November, 2016 to 30th December, 2016*	Rs. 12.50 lakhs or more (In current Account)	In Cash
		Rs. 2.50 lakhs or more (other than current Account)
	4. Deposits during 1st April, 2016 to 9th November, 2016 (i.r.o. accounts reportable under 3* above)	Rs. 12.50 lakhs or more (In current Account)
		Rs. 2.50 lakhs or more (other than current Account)
D.	Company/Institution issuing shares/ bonds/ debentures
	1.  Amount received from a person for acquiring bonds/debentures (other than on renewal)	Rs. 10 lakhs or more	N.A.
	2. Amount received from a person for acquiring shares (including share application money received)
E.	Company listed on RSE
	Buy Back of shares from any person (other than bought in open market)	Rs. 10 lakhs or more	N.A.
F.	Trustee/any other person managing a Mutual Fund
	Amount received from a person for acquiring units of 1/more schemes (other than on account of transfer from 1 scheme to another)	Rs. 10 lakhs or more	N.A.
G.	Authorised person under FEMA, 1999
	Amount received from any person for sale of foreign currency (including credit to foreign exchange card/ expense in currency through debit/credit card/ traveler’s cheque/draft/other instrument)	Rs. 10 lakhs or more	N.A.
H.	Inspector-General/ Registrar/ Sub-registrar under Registration Act, 1908
	Purchase or Sale of immovable property	Rs. 10 lakhs or more (actual value)	N.A.
		Rs. 30 lakhs or more (as per stamp duty value under Sec 50C)
I..	Any other person liable to audit under Sec 44AB (other than those mentioned above)
	Receipt of payment for sale of goods or services	Rs. 2 lakhs or more	In Cash

#The threshold limit shall be applied on the aggregate of the following:

1. All accounts of same nature

2. All transactions of same nature

3. In case of joint accounts, add the amount to each account holders’ threshold limit

4. Limit should be applied separately to deposits and withdrawals

The aggregation rule is applicable for all transaction types except :

→ Pt. H: Purchase or sale of immovable property and

→ Pt. I: Cash payment for goods and services.

> Illustrations on Aggregation rule:

1. All accounts of the same nature-

Mr. Amar holds two savings accounts in a bank. He deposits cash of Rs 3 lakhs in one and Rs 8 lakhs in another account during a FY.

By the above rule, the deposits made in both accounts which are of the same nature i.e. savings account.

These have to be aggregated for determining the threshold of Rs 10 lakhs for reporting in SFT. In this case, since the aggregate crosses the threshold of Rs 10 lakhs, the same requires reporting by the bank.

2. All the transactions of the same nature:

Mr. Bheem purchases shares of a Alpha Private Limited 10^th April 2016 for a value of Rs 4 lakhs. He subscribes to further shares on 1st October, 2016 for a value of Rs. 6 lakhs.

By the above rule, the acquisition of shares on 10^th April and 1^st October during the FY 2016-17 are transactions of the same nature, values of which have to be aggregated for determining the threshold of Rs 10 lakhs for reporting in SFT. In this case, since the aggregate equals the threshold of Rs 10 lakhs, the same requires reporting by the company issuing the shares

3. In case of joint accounts, add the amount each account holders’ threshold:

Mr. Charu and Mr. Danish are joint account holders of 2 savings accounts with the same bank. The deposits made in both the accounts will have to be aggregated to determine the threshold of Rs. 10 lakhs for the purpose of submission of SFT.

4. Limit should be applied separately to deposits and withdrawals

ABC Co. deposits Rs. 35 lakhs on 25^th April, 2016 and withdraws Rs. 20 lakhs 30^th April, 2016. According to the above rule, aggregation of deposits and withdrawals for determination of threshold of Rs. 50 lakhs cannot be done for the purpose of determining the requirement to file SFT.

Therefore, presuming a scenario where the above 2 are the only deposit and withdrawal transactions by ABC Co during the year, requirement to report this in SFT would not arise.

IV. Due date of furnishing SFT:

Further, the statement shall be furnished on or before 31^st May immediately following the financial year in which the transaction is registered or recorded.

V. Consequences of not furnishing / filing inaccurate or defective SFT:

Non-furnishing of SFT will attract penalty under section 271FA.

Sr. No.	Particulars	Penalty	Period for Penalty
1.	Failure to furnish SFT within the period specified in notice under Sec 285BA(5) (i.e. within a period of 30 days from date of service of notice)	Rs. 1000 per day of default	From the day immediately following the day on which the time specified in such notice for furnishing the statement expires
2.	Failure to furnish SFT under Sec 285BA(1)	Rs. 500 per day of default

*Maximum penalty has not been specified.

Rectification of inaccuracy:

Inaccuracy discovered by:	Rectification Period:
The reporting financial entity or person	Inform inaccuracy to the prescribed income tax authority within 10 days and furnish the correct information
The prescribed income tax authority	Rectifying the defect within a period of thirty days from the date of intimation of such defect.

As per section 271FAA, if inaccurate information is provided in the statement, and it is not informed to the income tax authority, the penalty leviable shall be Rs. 50,000 and the original statement shall be treated as invalid.

VI. Registration

Every reporting person shall obtain a registration number by communicating the name, designation, address and telephone number of the Designated Director and the Principal Officer to the Principal Director General of Income-tax (Systems)

“Designated Director” means a person designated by the reporting person and includes—

Sr. No.	Designated Director means:	For the following Reporting entities:
1.	Managing Director	Company
2.	Managing Partner	Partnership Firm
3.	Proprietor	Proprietorship Concern
4.	Managing Trustee	Trust
5.	Person managing affairs of the entity	AOP, BOI, any other person

VII. Contents of the Form and other details

> Transaction Types, reporting format and Statement type:

Reporting entity is required to furnish separate Form for each transaction type.

The Form Type applicable to each transaction is given below:

No.	Particulars	FORM B	FORM C
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).	–	√

An illustration to explain the reporting format is as follows::

Mr. Mohan has two Credit Cards and the aggregate value of the transactions through both the cards is Rs. 11.50 lakhs (i.e. exceeds the threshold for reporting).

This total value of Rs. 11.50 lakhs shall be reported in Part B4 of Form 61A.

(i.e. Form Type: B, SFT: 004)

The Form can be filed for either of the following statements:

• NB – New Statement containing new information
• CB – Correction Statement containing corrections for previously submitted information
• ND – No Data to report

VIII. Some basic login details

1. If Form-61A (i.e. SFT) is filled during the previous year then, directly visit the Reporting Portal and login as follows:

a. Username: PAN of Authorised Representative (as mentioned in previous return)

b. Password: ‘Aabcd@1506’

(i.e. First five alphabets of PAN of Authorised Representative followed by DOB [DDMM format], say PAN: AABCD1234Z, DOB: 15/06/1997)

2. If Form 61A is going to be filed for the first time then login at Income Tax efiling website using the User Id and password of the company itself.

Under ‘My Account → Reporting Portal → New Registration’

Once the registration form is filled, it shall be processed by the department.

On approval by the department, ITDREIN shall be communicated to the assesse via an email, based on which Form 61A can be filed.

Points to remember:

1. Due date for filing SFT for F.Y. 2017-18 is 31^st May, 2018.

2. New Reporting Portal for SFT is in operation.

3. From 61A can be downloaded from the Utilities section under Resources in the New Reporting Portal.

4. User Manual for filling the form and the annexure is also available under Resources section.

5. In case of SFT being applicable for the first time, ITDREIN (Income Tax Reporting Entity Identification Number) needs to generated before filing SFT.