Statement of Financial Transactions (SFT) and ITDREIN

Articles explains about What is Statement Of Financial Transactions (SFT) and  ITDREIN, Who is reporting authority to file SFT, Which transactions needs to be reported. How to create ITDREIN, Nature and Value of Transactions to be Reported Under Rule 114E, Reporting format and how to report SFT.

ANNUAL INFORMATION RETURN

INTRODUCTION

Section 285BA of the Income Tax requires specified reporting persons to furnish statement of financial transaction. Rule 114E of the Income Tax Rules, 1962 specifies that the statement of financial transaction is furnished in Form No. 61A.

Who is a Reporting Authority

Any person, being:

• an assessee; or
• the prescribed person in the case of an office of Government; or
• a local authority or other public body or association; or
• the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908); or
• the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988) ; or
• the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898) ; or
• 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
• the recognized stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; or
• an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934) ; or
• a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996) ; or
• 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 reportable 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 reportable account to the income-tax authority or such other authority or agency as may be prescribed.

Registration

“Reporting Entity who are already registered in e-Filing portal can use this functionality to generate ITDREIN (Income Tax Department Reporting Entity Identification Number) and upload required forms – Form 61, Form 61A in “reporting portal”.

The Reporting Entities as per Section 285BA of the IT Act, 1961 must register themselves with the Income Tax Department (ITD) at the Reporting Portal. To access the portal, visit the URL https://report.insight.gov.in.

The step-by-step process to register is as follows:

1. Log into e-filing portal (https://incometaxindiaefiling.gov.in ) and select Reporting Portal under My Account.

2. Select New Registration and click Continue. (Entities who have already generated an ITDREIN but have not

registered their Principal Officer on e-filing portal, shall select Manage Principal Officer)

3. Choose the relevant Form Type and Reporting Entity Category and click Next to continue.

4. Enter the relevant details on the Reporting Entity Details Page.

5. Once details are filled, Click Add Principal Officer.

6. User is navigated to Principal Officer Details page. On the same, enter complete details of the Principal Officer.

7. User can “Submit” the form or may proceed to add “Designated Director”, “Nodal Officer”, “Alternate Nodal Officer” and “Sub Users”.

8. Once all the users are added, user can submit the details by clicking Submit.

9. Upon clicking the Submit button, the following Message appears and the acknowledgement message is displayed with link to download Acknowledgment PDF.

“Your details have been successfully submitted. Please find the registration Request Number “xxxxxxxxxxxx”. An email has been sent to your registered email id.

Download Acknowledgment PDF”

Upon successful registration, ITDREIN and user credentials are sent to the registered email ID of the Reporting Entity and the users respectively.

Statement Of Financial Transactions (SFT)

Reporting person/entity is required to furnish separate Form for each transaction type listed below:

• 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)
  

Nature and Value of Transactions to be Reported Under Rule 114E

S. No.	Nature and value of transaction	Class of person (reporting person)
1	(a) 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. (b) 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). (c) Cash deposits or 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.	A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act).
2	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.	(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).
3	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.	(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); (iii) Nidhi referred to in section 406 of the Companies Act, 2013 (18 of 2013); (iv) Non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934 (6 of 1934), to hold or accept deposit from public.
4	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.	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.
5	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).	A company or institution issuing bonds or debentures.
6	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.	A company issuing shares.
7	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.	A company listed on a recognised stock exchange purchasing its own securities under section 68 of the Companies Act, 2013 (18 of 2013).
8	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).	A 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.
9	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 traveler’s cheque or draft or any other instrument of an amount aggregating to ten lakh rupees or more during a financial year.	Authorised person as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
10	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.	Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.
11	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 this rule, if any.)	Any person who is liable for audit under section 44AB of the Act.
12	Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to 潭 (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.	(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898)
13	Cash deposits during the period 1st April, 2016 to 9th November, 2016 in respect of accounts that are reportable under Sl.No.12.	(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).”;

 Identification of Transactions to be Reported

The first step in preparation of Statement of Financial Transactions (SFT) is to identify transactions/persons/accounts which are reportable under Rule 114E. In the second step, the reporting person/entity is required to submit details of transactions/persons/accounts which are determined as reportable.

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 SFT- 012 (Purchase or sale of immovable property) and SFT- 013 (Cash payment for goods and services).

Reporting Format 

Form 61A has four parts. Part A contains statement level information is common to all transaction types. The other three parts relate to report level information which has to be reported in one of the following parts (depending on the transaction type):

• Part B (Person Based Reporting)
• Part C (Account Based Reporting)
• Part D (Immovable Property Transaction Reporting)

The applicability of the reporting format is discussed in following paragraphs.

Person Based Reporting (Part B)

Part B shall be used for person based reporting which is relevant to following transactions:

• SFT- 001: Purchase of bank drafts or pay orders in cash
• SFT- 002: Purchase of pre-paid instruments in cash
• 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- 013: Cash payment for goods and services

For determining reportable persons and transactions, the reporting person/entity is required to aggregate all the transactions of the same nature recorded in respect of the person during the financial year (refer to the applicability of aggregation rule). In a case, where the transaction is recorded in the name of more than one person, the reporting person/entity should attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons.

The reporting person/entity is required to submit details of persons and transactions which are determined as reportable. The reporting format also enables reporting person/entity to furnish information relating to each individual product within a product type. E.g: if a person has multiple credit cards and the aggregate value of the transactions in all credit cards exceeds the threshold value, the aggregate transaction value will be reported in section B3 of form 61 A and the transactions pertaining to individual credit cards can be reported in section B4 of form 61 A.

Account Based Reporting (Part C)

Part C shall be used for account based reporting which is relevant to following transactions:

• SFT- 003: Cash deposit in current account
• SFT- 004: Cash deposit in account other than current account
• SFT- 014: Cash deposits during specified period (9th Nov to 30th Dec, 2016).

For determining reportable persons and accounts, the reporting person/entity is required to take into account all the accounts of the same nature maintained in respect of that person during the financial year and aggregate all the transactions of the same nature recorded in respect of the person during the financial year (refer to the applicability of aggregation rule). In a case where the account is maintained in the name of more than one person, the reporting person/entity should attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons. In case of SFT- 003 (Cash deposit or withdrawals in current account), the threshold limit has to be applied separately to deposits and withdrawals in respect of transactions. After identification of reportable persons and accounts, the reporting person/entity is required to submit details of accounts which are determined as reportable. Part C3 of the form 61 A has details of the accounts that need to be reported along with the aggregate transaction values. Aggregation of transaction has the same definition as explained in person based accounting.

Immovable Property Transaction Reporting (Part D)

Part D shall be used for reporting of purchase or sale of immovable property (SFT- 012). The reportable immovable property transactions have to be determined by applying the threshold limit. The reporting person/entity is required to submit specified details of immovable property transactions which are determined as reportable.

Statement Type

One Statement can contain only one type of Statement. Permissible values for type of Statement are:

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

Statement Number and Statement ID

Statement Number is a free text field capturing the sender’s unique identifying number (created by the sender) that identifies the particular Statement being sent. The identifier allows both the sender and receiver to identify the specific Statement later if questions or corrections arise. After successful submission of the Statement to ITD, a new unique Statement ID will be allotted for future reference. The reporting person/entity should maintain the linkage between the Statement Number and Statement ID. In case the correction statement is filed, statement ID of the original Statement which is being corrected should be mentioned in the element ‘Original Statement ID’. In case the Statement is new and unrelated to any previous Statement, ‘0’ will be mentioned in the element ‘Original Statement ID’.

Report Serial Number

The Report Serial Number uniquely represents a report within a Statement. The Report Serial Number should be unique within the Statement. This number along with Statement ID will uniquely identify any report received by ITD. In case of correction, the complete report has to be resubmitted. The Report Serial Number of the original report that has to be replaced or deleted should be mentioned in the element ‘Original Report Serial Number’. This number along with Original Statement ID will uniquely identify the report which is being corrected. In case there is no correction of any report, ‘0’ will be mentioned in the element ‘Original Report Serial Number’.

Form 61 Acknowledgement No.

If reporting person/entity has received declarations in Form 60 in respect of transactions listed in Rule 114E, Form 61 is required to be furnished to ITD. As mentioned in Chapter I, on successful loading of Form 61 (containing the particulars of Form 60), an Acknowledgement No. would be generated which has to be mentioned at the time of filling Form 61A. Hence, unless Form 61 has been furnished, Reporting person/entity may face difficulty in filling Form 61A. Accordingly, it is to be ensured that Form 61 is furnished to the Department before Form 61A is filled.

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(Republished with Amendments by Team Taxguru)