Last updated on September 20th, 2022 at 02:18 pm
All about the filing of SFT and consequences of non-compliance
The government is continually trying to keep a tab on black money and high-value transactions undertaken by the taxpayer. In its en-devour to achieve this, the Income-tax Law has introduced the concept of Statement of Financial Transaction (SFT). As per Section 285BA of the Income Tax Act, 1961 w.e.f 01-04-2015, some specified entities/persons are required to furnish a statement of the financial transaction also called as a reportable account in respect of certain specified financial transactions for any reportable account registered/ recorded/ maintained by them during the financial year to the income-tax authority. This was previously called ‘Annual Information Return (AIR)’.
Which transactions are specified for the filing of the Statement of Financial Transaction (SFT) and who is responsible to file it?
The intent of the government here is to get the data regarding taxpayers and verify the disclosure of the same in the tax returns/filing of the tax returns. Hence, the transactions listed are reasonably “high value” transactions as mentioned below. Every transaction is reported by various sources like banks, corporates, mutual funds, etc. This data will also be used by the AOs for faceless assessments.
What to do when your 26AS indicates SFT transactions?
The table below explains various transactions to be reported in SFT and the corresponding reporting authorities.
[su_table]
| Transaction | Reporting person |
| Payment made in cash aggregating to Rs. 10 lakh or more in a financial year. – for purchase of bank drafts or pay orders or banker’s cheque OR – for purchase of pre-paid instruments issued by the Reserve Bank of India. |
Banks including co-operative banks |
| Cash deposits/withdrawals aggregating to Rs. 50 lakh or more in one or more “current accounts” of a person in a financial year. It is to be noted that cash deposit or withdrawal using a bearer cheque will also be considered here. | Banks including co-operative banks |
| Cash deposits/withdrawals aggregating to Rs. 10 lakh or more in accounts “other than current accounts” of a person in a financial year | Banks including co-operative banks and Post Offices |
| One or more Time Deposits aggregating to Rs 10 lakhs or more in a financial year for a person. This does not need reporting of time deposits made through the “renewal” of old-time deposits. | Banks including co-operative banks, Post Office, Nidhi Company, NBFCs |
| Credit card payments by any person aggregating to
Rs 1 lacs or more in Cash or Rs. 10 lacs or more in any other mode |
Banks including co-operative banks and any other credit card issuing company/institution. |
| Receipt from any person of an amount aggregating to Rs. 10 lakh or more in a financial year in respect of
· Investment in bonds other than renewals or · Investment in debentures other than renewals or · Issuance of shares or |
A company or institution issuing debentures, bonds, or shares |
| Buyback of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to Rs. 10 lakh or more in a financial year | A listed entity |
| Investment in Mutual funds by any person of an amount aggregating to Rs. 10 lakh or more in a financial year (other than switch from one scheme to another scheme) | A trustee of a Mutual Fund |
| Purchase or Sale of foreign currency of an amount aggregating to Rs. 10 lakh or more during a financial year including
currency cards or expense in foreign currency through a debit or credit card or traveler’s cheque or draft or any other instrument |
Authorized dealer under FEMA |
| Purchase or sale by any person of immovable property for an amount of Rs. 10 lakh or more or valued by the stamp valuation authority at Rs. 30 lakh or more. | Inspector-General or Registrar or Sub-Registrar |
| Cash receipts exceeding Rs. 2 lakh for sale, by any person, of goods or services of any nature (other than the abovementioned) | Person liable for tax audit u/s 44AB |
| Cash deposits during the period 9th November 2016 to 30th December 2016 aggregating to—
(i) Rs. 12,50,000 or more, in one or more current account of a person; or (ii) Rs. 2,50,000 or more, in one or more accounts (other than a current account) of a person. (Also the details of the cash deposits in respect of above accounts during 1st April 2016 to 9th November 2016 aggregating the above amounts) |
Banks including co-operative banks and Post Office |
[/su_table]
In August 2020, news broke that the government is widening the scope of SFTs to include transactions like hotel expenses exceeding Rs 20,000, payments of rent in excess of Rs 40,000, etc. However, there is no formal notification in this regard issued yet. Moreover, the government has clarified that only third parties would be required to report high-value transactions to the income tax department and there is no need for the taxpayers to mention their high-value transactions in the return.
How to file the “Statement of Financial Transaction” (SFT)?
The Statement of Financial Transaction or SFT is submitted in Form no 61A electronically. To file form 61A, one should Download the utility under option “Forms” on the e-filing portal of income tax. This can be filed in XML format.
SFT needs to furnished on or before 31st May of the following FY in which the transaction took place.
Considering the second wave of corona pandemic, the Ministry of Finance has extended the due date for submitting the SFT for FY 2020-21 to 30th June 2021. (Circular No. 9 dated 20.05.21)
Consequences of non-filing of SFT
If any reporting authority fails to SFT, a penalty under section 271FA can be levied of Rs. 500 per day of default.
However, section 285BA(5) empowers the tax authorities to issue a notice and ask the person to file the statement within a period not exceeding 30 days from the date of service of the notice. In such a case person shall furnish the statement within the specified time as per the notice. If a person fails to file the statement within the specified time, then a penalty of Rs. 1,000 per day will be levied from the day specified in the notice
What to do if a wrong SFT appears in 26AS?
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This year my income tax return shows under SFT 005 an amount about 31000, while I have not made any transaction more than 10 lacs that is a border line.plz.guide me in this regard.
Your 26AS may be showing an amount in SFT 005. You need not show anything in ITR for above 31000/-.
Madam
My SFT/AIS for the AY 2021-22 has shown share purchase transactions of Rs. 397615/- and Sale transactions of Rs.488075/- and Off market credit transactions of Rs. 5368/-
How to interpret the same for filing ITR
Purchase and sale of shares would result in capital gain and would be taxed accordingly.
Mam,
I had purchased a flat in 2013 for 33L and sold it in 2021 at price 29L, however the valuation of sold flat is 33L. this is now reflected in my and wife’s 26AS. Which ITR form I need to declare this SFT. As I sold it at loss, am I right that I am not liable to pay tax?
With whatever minimal information provided above. It is evident that the property is sold at a value lower than the circle rate prevalent. As the same is also reflected in your 26AS.
As per Section 56 (2)(x) of the act, the difference(Rs 4 lacs) is taxed as ‘other income’ for the buyer. While the seller(your wife) of the property will have to pay capital gains tax on the circle rate of the property.
For any further query, you can reach out to us at info.financepost@gmail.com
I have 3 SFT-006 Payment for Credit Card showing in my form26AS. What needs to be done in case of filing ITR?
You don’t have to do anything about it. As long as the transactions are genuine and the source of income for payment can be explained.
mam, my sft showing a cash deposit of 30 lks which is the accumulated savings of my wife given by her siblings and parents over a period ..but the first name is mine in bank acc ..so showing in my acc sft ..what to do
You should have not deposited your wife’s savings in your bank account. And it is difficult to explain that one has 30 lakhs of hard cash from accumulated savings which is deposited in bank in a financial year. You will certainly be asked to explain the source of cash deposits.
I am an NRE account holder and renew my deposits every year, so this year too my 26AS indicates 2 SFT-005 exceeding 12 lacs
I am not sure if this is required to be reported in ITR (for NRE too) ?
For NRIs, interest on deposits made in the NRE account is not taxable in India.
You will be required to show interest and then show it is as exempt income.
Thanks about interest declaration as exempt income, but my query was regarding SFT are these transactions required to be reported or not ?
No, you are not required to report that anywhere in the ITR.