Removal of black money transaction and tax evasion are the major problems the government India is facing from decades. The government of India had taken numerous measures to overtake such problems by way of getting sensitive and high value transaction details from indirect source. Such measures are Tax Deducted at Source (TDS), Tax Collected at Source (TCS) etc. In addition to that nowadays government is getting information not directly from assessee, but indirectly from banks, agencies, organizations or specified persons about assesse’s transactions during the year, by way of Statement of Financial Transaction (SFT) (Few professionals are saying it Annual Information Return (AIR)). Such specified persons are bound to submit “Annual Information Return (AIR)” giving details about transactions specified under Section-285BA. Hear in this article we shall discuss about provision of Statement of Financial Transaction (SFT). To get in-depth knowledge we have to discuss following questions:
(1) What are the governing provisions of law?
- Section-285BA- Obligation to furnish statement of financial transaction or reportable account
- Rule-114E- Furnishing of statement of financial transaction
- Rule-114G- Information to be maintained and reported
- Form-61A/61B- Statement of Specified Financial Transactions under section 285BA(1) of the Income-tax Act, 1961
- Section-271FA-Penalty for non-compliance
(2) What are the transactions required to report, by whom?
Following transactions are required to report under Statement of Financial Transaction (SFT):
|Sr. No.||Specified Person||Nature of transaction||Threshold Limit|
|1||Banking Company and Co-operative Banks to which Banking Regulations Act Applies||Cash Payment for purchase of Bank Draft, Pay Order, Banker’s Cheque||Rs. 10 Lakh or More in aggregate during a Financial Year|
|2||Banking Company and Co-operative Banks to which Banking Regulations Act Applies||Cash Payment for purchase of prepaid instruments issued by RBI||Rs. 10 Lakh or More in aggregate during a Financial Year|
|3||Banking Company and Co-operative Banks to which Banking Regulations Act Applies||Cash deposit or Cash withdrawal in one or more Current Account||Rs. 50 Lakh or More in aggregate during a Financial Year|
|4||Banking Company and Co-operative Banks to which Banking Regulations Act Applies, Post Master||Cash deposit in one or more accounts of a person (other than current account and time deposit)||Rs. 10 Lakh or More in aggregate during a Financial Year|
|5||Banking Company and Co-operative Banks to which Banking Regulations Act Applies, Post Office, Nidhi Companies, NBFC||One or more time deposit of a person (other than made through renewal)||Rs. 10 Lakh or More in aggregate during a Financial Year|
|6||Banking Company and Co-operative Banks to which Banking Regulations Act Applies, any other company or institution issuing credit cards||Payment by any person for credit card Bills||Rs. 1 lakh or more paid in cash or Rs. 10 lakh or more paid by any other mode of payment in aggregate in a Financial Year|
|7||Company or Institutions issuing Bonds or Debenture||Receipt from any person acquiring Bonds or Debentures (other than renewal of Bonds or Debentures)||Rs. 10 Lakh or more in aggregate in a Financial Year|
|8||Company issuing Share||Receipt from any person acquiring Shares (including Share Application Money)||Rs. 10 Lakh or more in aggregate in a Financial Year|
|9||Listed Company in a Recognized Stock Exchange in India||Buy Back of Shares (other than shares bought back from open market)||Rs. 10 Lakh or more in aggregate in a Financial Year|
|10||Trustee of Managing person of Mutual Fund||Acquisition of units of one or more schemes of Mutual Fund (other than receipt for transfer from one scheme to another scheme)||Rs. 10 Lakh or more in aggregate in a Financial Year|
|11||Authorized Person as per FEMA Act,1999||Receipt for sale of foreign currency including any credit of such foreign currency card or expense in such foreign currency through a debit or credit card or by issue of travelers cheque or draft or any other instrument||Rs. 10 Lakh or more in aggregate in a Financial Year|
|12||Inspector General, Registrar, Sub-Registrar||Purchase or sale by any person of immovable property||Rs. 30 Lakh or more or in case of inappropriate consideration, if value is Rs. 30 Lakh or more|
|13||Any person liable for an Audit under Section-44AB||Receipt of cash by any person, of goods or services (other than above points)||Rs. 2 Lakh or more|
|14||Banks, Co-operative banks, Banking Institutions, Post Master||Cash deposit during 9th November, 2016 to 30th December, 2016||Rs. 12.50 Lakhs or more in one or more Current Account or Rs. 2.50 Lakhs or more in one or more accounts other than Current Account|
|15||Banks, Co-operative banks, Banking Institutions, Post Master||Cash deposit during 1st April, 2016 to 9th November, 2016||Rs. 12.50 Lakhs or more in one or more Current Account or Rs. 2.50 Lakhs or more in one or more accounts other than Current Account|
(3) What is the form?
There are two different forms.
-From No.-61B-required to be filed by Reporting Financial Institution.
-Form No.-61A- required to be filed by other persons or reporting entities.
Here, Rule No.-114F defines Financial Institutions as a custodial institution, a depository institution, an investment entity, or a specified insurance company.
(4) How to deal with joint party transaction?
- If share of each joint party is known than give information as if no joint transaction is occurred.
- If share of each joint party is unknown than give all particular (like Name, PAN, Address etc.) except amount of all joint party and disclose amount, date and joint transaction party count only in the row of first party.
|Name||Transaction Record Number||Joint Party Count||Transaction Date|
|Mr. Kamal (Son of Mr. Kumar)||2||0|
(5) What is the due date of filing SFT form?
SFT form is required to be filed by 31st May following the end of Financial Year for which it is.
Ex. SFT for Financial Year-2019-20 is required to be filed by 31st May, 2020.
(6) What is the procedure to file Such form?
Generally, Statement of Financial Transaction (SFT) is being filed electronically using Digital Signature to Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation). However, there is an option available to Post Master General or Registrar or Inspector General may file SFT Form in a computer readable media along with Form-V such as DVD or Compact Disk. The procedure to file SFT is as follows:
- Login to your income tax portal
- Click Generate New ITDREIN
- Select type of Form and Category of Reporting Entity than click on “Generate ITDREIN”
- ITDREIN will be generated and Confirmation E-mail and SMS will be received on registered mail ID and Mobile Number.
- Go to My Account>Manage ITDREIN
- Click on E-file>Upload Form No.-61A/61B
- Verify PAN, Form Name, Financial Year, Half Year, Category of Reporting Entity, Form Type (Original, Correction, Nil)
- Upload the form by signing using Digital Signature
- On successful submission confirmation message will be forwarded to registered e-mail and SMS.
- After processing of uploaded file if it is rejected than we need to again file Correction Statement.
If SFT is being rejected then deficiency found in the form will also be intimated to the concerned institution, entity or person. Such deficiency may be corrected by filing correction statement within 30 days or such extended period of 30 days on specific request, from the date of intimation. However, in the case of failure to file correction statement it will be considered as invalid and it will be deemed that no SFT form is filed.
(7) What are the penalty provisions in case of failure to comply with provisions?
In case of failure to file SFT form within due date, Income Tax Department may serve a notice asking to file such form within 30 days from the date of service of notice.
- Failure to file within due date-Rs. 500 per day.
- If not filed within extended period also-Rs. 1000 per day.
If after filing SFT form, any inaccuracy comes to the knowledge, then such inaccuracy must be informed to the Income Tax Department and correct information is required to give within 10 days.
Penalty will be levied of Rs. 50000 on Reporting Financial Institution in the following cases:
- Inaccuracy is because of deliberate intention or failure to comply with due diligence requirement.
- Person knows inaccuracy at the time of filing of SFT form but does not inform.
- If inaccuracy is found by person himself and such inaccuracy is informed to Income Tax Department, but fails to give correct information within 10 days.