All about filing of SFT and consequences of non-compliance

all about filing of SFT and consequences of non-compliance
Share This Article
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

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.

The table below explains various transactions to be reported in SFT and the corresponding reporting authorities.
TransactionReporting 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 accountsof a person in a financial yearBanks 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 yearA 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

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 the 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.

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) empower 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



Click below to receive regular updates

 

 

CA Janhavi Phadnis