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We have discussed all things below.
Basic Provisions (statement of financial transaction)
- Under Section 285BA of the Income Tax Act, 1961, certain individuals, taxpayers and designated officials and authorities are required to submit an SFT.
- The Income Tax Law established the concept of SFT in order to monitor large financial transactions made by taxpayers. (statement of financial transaction)
Transactions required to reported
|Sr||Nature and value of transaction||Reporting person|
|1||Payment made in cash to purchase bank drafts or pay orders or bankers’ cheque of an amount aggregating to ₹10 lakhs or more in an FY||Banking Company or Co-operative Bank|
|2||Payment made in cash to purchase prepaid Instruments issued by RBI of an amount aggregating to ₹10 lakhs or more in an FY||Banking Company or Co-operative Bank|
|3||Cash deposits or cash withdrawals from current account(s) of person aggregating to ₹50 lakhs or more||Banking Company or Co-operative Bank|
|4||Cash deposits of ₹10 lakhs or more in FY in one or more accounts (other than current account or time deposits) (example – savings account)||Banking Company or Co-operative Bank or Post Master General|
|5||One or more time deposits of ₹10 lakhs or more in FY|
|6||Payment of ₹1 lakh or more in cash towards credit card(s) bill in FY|
|7||Payment of ₹10 lakh or more in FY in other than cash mode towards credit card(s) bill in FY|
|8||Receipt of ₹10 lakhs or more in FY by company for acquiring bonds or debentures or shares issued by that company||Company issuing such instruments or shares|
|9||Buy Back of shares from person for amount of value of ₹10 lakhs or more in FY by company||Listed Company exercising buy back|
|10||Receipt of ₹10 lakhs or more in FY by mutual fund trustee or mutual fund manager|
|11||Receipt of ₹10 lakhs or more in FY for selling foreign currency (Including foreign debit/credit card, Traveller’s Cheque, etc)||Authorized person under FEMA Act|
|12||Purchase of immovable property of ₹10 lakhs or more||Registrar or Sub-Registrar|
|13||Cash receipts of ₹2 lakhs or more for sale of goods or services or both||Any Person who is liable to get his books audited u/s 44AB|
|14||Capital Gains on Listed Shares or Instruments|
Due Date of Furnishing SFT
- The SFT must be submitted by the prescribed date of May 31st after the end of the Fiscal Year.
- The SFT documents will be sent electronically in the form of 61A.
- The SFT will be provided to the Director or Joint Director (of Income Tax Intelligence and Criminal Investigation)
- Failure to submit a Statement of Financial Transactions (SFT) will incur a penalty of ₹500 per day of delay, as per section 271FA.
- In addition to the mentioned deadlines, Authorities may also require a person to file their SFT within 30 days of the notice being served; not doing so can result in a daily penalty of ₹1,000. (statement of financial transaction)
Consequences of Inaccuracy (statement of financial transaction)
- If an individual finds inaccuracy in their SFT after submitting it and does not report and correct it within 10 days, they may be penalized with ₹50,000 by the Income Tax Authorities.
All about SFT under Section 285BA read with Rule 114E
Under Section 285BA of the Income Tax Act, certain designated entities are obligated to submit a statement of financial transactions. Rule 114E of the Income Tax Rules, 1962 states that the statement of financial transactions mandated by subsection (1) of section 285BA must be submitted in Form No. 61A. As you all know, the 2019 Budget has expanded the scope of the Statement of Financial Transactions (SFT). Consequently, compliance will be more rigorous this Financial Year (2019-20).
Who are required to file statement of SFT in Form 61A:
- Anyone who is liable to be audited according to section 44AB of the Income Tax Act
- A Banking Company
- A Co-operative Bank
- Post Master General of Post office
- A Nidhi referred to Section 406 of the Companies Act 2013.
- A Non-banking Financial Company (NBFC)
- Any Institution issuing Credit Card
- A Company or Institution issuing bonds or debentures
- A Company issuing shares
- A company that is registered on a recognized stock exchange buys its own stocks.
- A person appointed by the trustee of a Mutual Fund or someone who has been given permission by the trustee.
- Authorized Dealer, Money Changer, Off-shore Banking Unit, or any other person as defined in the FEMA, 1999.
- An Inspector-General or Sub-Registrar appointed under Registration Act of 1908.
What is the periodicity and due date of furnishing statement of financial transaction?
The financial transactions report (online filing in Form No. 61A with digital signature) must be completed by the 31st of May following the fiscal year in which the transaction was registered or documented. For the 2019-20 fiscal year, the deadline is May 31, 2020. (statement of financial transaction)
Nature of transactions alongwith its monetary value required to be reported under SFT
|Sr no||Nature of transaction alongwith respective reporting person||Value of transaction|
|1||Cash payment purchase of bank drafts or pay orders or banker’s cheque reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies||Aggregating to Rs 10 lakh or more in a FY|
|Cash payments for purchase of pre-paid instruments issued by Reserve Bank of India and reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies||Aggregating to Rs 10 lakh or more during the FY|
|Cash deposits or Cash withdrawals (including through bearer’s cheque) in one or more current account of a person reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies||Aggregating to Rs 50 lakh or more in a FY|
|2||Cash deposits in one or more accounts other than a current account and time deposit of a person reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies or by Post Master General||Aggregating to Rs 10 lakh or more in a FY|
|3||One or more time deposits (other than renewed time deposit of another time deposit) of a person reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies or by Post Master General or by Nidhi companies or By NBFCs||Aggregating to Rs 10 lakh or more in a FY|
|4||Credit card payments made by any person either in cash or by any other mode in a Financial Year reported by A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies or any other company or institution issuing credit card||Aggregating to: Rs 1 lakh or more in cash or Rs 10 lakh or more by any other mode in a FY|
|5||Receipt from any person for acquiring bonds or debentures issued by the company or institution (other than renewal of the bond or debenture issued) reported by A company or institution issuing bonds or debentures||Aggregating to Rs 10 lakh or more in a FY|
|6||Receipt from any person for acquiring shares (including share application money) issued by the company and Reported by a company issuing shares||Aggregating to Rs 10 lakh or more in a FY|
|7||Buyback of shares from any person (other than the shares bought in the open market) reported by a company listed on a recognised stock exchange purchasing its own securities||Aggregating to Rs 10 lakh or more in a FY|
|8||Receipt from any person for acquiring units of one or more schemes of a Mutual Fund (other than transfer from one scheme to another of that Mutual Fund) reported by 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||Aggregating to Rs 10 lakh or more in a FY|
|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 travellers cheque or draft or any other instrument reported by Authorised person as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999||Aggregating to Rs 10 lakh or more during a FY|
|10||Purchase or sale of immovable property by any person reported by Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.||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|
|11||Receipt of Cash payment for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10) reported by any person who is liable for audit under section 44AB of the Act||Exceeding Rs 2 lakh|
How to Register on Reporting Portal for SFT filing
The Reporting Portal permits entities that are responsible for reporting to sign up with the Income Tax Department (ITD). To access the portal, visit the URL: https://report.insight.gov.in
The step-by-step process to registering through this portal is as follows:
- Log in the e-filing portal and choose the Reporting Portal option in My Account.
- For those who have already created an ITDREIN but have not yet registered their Principal Officer on the e-filing portal, choose the Manage Principal Officer option, otherwise select New Registration and press the Continue button.
- Select the applicable Form Type and Reporting Entity Category and press Next to proceed.
- Be sure to fill out the form on the Reporting Entity Detail Page correctly.
- Only if Form Type 61B is chosen, must the fields in the “Sponsored Entity or Trustee Documented Trust” section be completed.
- Once the necessary information is completed, press the “Add Principal Officer” button at the bottom.
- On the new page, fill out all the information pertaining to the Principal Officer.
- The user has the option to submit the form, or they can add a Designated Director, Nodal Officer, Alternate Nodal Officer, and Sub Users.
- Once all the users have been added and the Submit button is clicked, a dialog box will appear. (statement of financial transaction)
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
Acknowledgement message will be displayed with link to download Acknowledgment PDF.
11. Once you have registered successfully, ITDREIN and your login information will be sent to the email address you provided. You can then use these details to log in to the Reporting Portal. (statement of financial transaction)
5. How to file Statement of Financial Transaction online?
- To submit and view SFT Preliminary Responses, please visit the Reporting Portal (Use this link – https://report.insight.gov.in/reporting-webapp/portal/homePage )
- Sign up for the Reporting portal by using the My Account menu. (statement of financial transaction)
- It is important to remember that all documents submitted to the Reporting Portal should be in XML format, following the schema issued by the Income-tax Department.
- Once the XML file is generated, use the Submission utility to sign and encrypt it, and then package it for uploading. (statement of financial transaction)
- Submit the statement on Reporting Portal
- When the submission is completed successfully, a confirmation email containing an “Acknowledgment Number” will be sent to the registered email address.
- To get further information, look at the “SFT quick reference Guide” and “Reporting Portal User Guide” located in the Resources section of the Reporting Portal.
What are different parts of Form 61A
Form 61A consists of two parts. Part A, which contains statement level information for all kinds of transactions, is shared by all types of transactions.
The report level information should be reported in one of the following parts below, depending on the type of transaction. (statement of financial transaction)
- Part B (Person Based Reporting)
- Part C (Account Based Reporting)
- Part D (Immovable Property Transaction Reporting)
Consequences of not furnishing statement of financial transactions or reportable accounts? (statement of financial transaction)
If a statement of financial transaction or reportable account is not provided, a penalty of Rs. 100 per day will be levied under section 271FA.
According to the provisions of section 285BA(5), if a person is required to submit a statement and has not done so within the prescribed time, the relevant income tax authorities can issue a notice requiring them to file the statement within a maximum of 30 days from the time of receiving the notice. The person must then submit the statement within the time frame specified in the notice. (statement of financial transaction)
If the individual does not submit the report within the designated period, a penalty of Rs. 500 per day can be imposed from the day after the deadline indicated in the notice has passed.
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