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Section 285BA of the Income Tax Act, 1961 read with Rule 114E requires certain specified reporting persons to furnish statement of financial transaction (SFT return) for certain transaction entered in the financial year

Legal Framework

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 required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in Form No. 61A.

Who is a Reporting Entity?

Reporting Entity or Reporting Person is an entity which is required to furnish a Statement of Financial Transaction (in Form 61 A) or Statement of Reportable Account (in Form 61B) with the Income Tax Department as per the provisions of section 285BA of the Income Tax Act 1961. Also, Under Rule 114D of IT rules 1962, any entity/person receiving Form 60 is required to report details of Form 60 in Form 61.

Which all persons or entities are  are required to file SFT ? 

  • Person liable for audit u/s 44AB of the Income Tax Act
  • Banking Company
  • Co-operative Bank
  • Post Master General of Post office
  • Nidhi company referred u/s 406 of the Companies Act 2013
  • NBFC(Non-banking Financial Company)
  • Company or Institution issuing bonds or debentures
  • Company issuing shares
  • Listed Company (listed on a recognised stock exchange) purchasing its own securities u/s 68 of Companies Act 2013
  • Trustee of a Mutual Fund or such other person managing the affairs of the MF
  • Authorized Person under FEMA(Dealer, Money Changer, Off-shore Banking Unit or any other person defined in FEMA, 1999)
  • Inspector-General/Registrar/ Sub-Registrar appointed under Registration Act, 1908
  • Banking company or a co-operative bank or any other company or institution issuing a credit card

 

Is filling  Mandatory for  NIL Statement?

No. However it is advisable to submit ‘SFT Preliminary Response’.

What are the form under Section 285BA ?

There are three forms namely Form 61, 61A and 61B.

Form61: Details of Form 60 submitted by transacting parties not having PAN

Form 61A: Statement of financial transactions (SFT)

Form61B: Statement of reportable accounts (SRA)

what are specified financial transactions ? 

Specified Person Type of transaction Amount Value(Rs.)
Person liable for audit u/s 44AB of the Income Tax Act Sale by any person, of goods or service of any nature Receipt of cash exceeding Rs. 2 lakhs
Banking Company or  Co-operative Bank Payment made in cash for the purchase of :
– Bank Draft’s
– Pay orders(PO), –Banker’s Cheque
– Pre-paid instrument issued by RBI 
Aggregating Rs. 10 lakhs or more in a financial year.
–> Cash deposit or cash withdrawals(including bearer’s cheque) Aggregating Rs. 50 lakhs or more in a financial year ,from one or more current account of a person.
Banking Company or Co-operative Bank or Post Master General Cash Deposit(other than current account and time deposit) of a person Aggregating to Rs.10 lakh or more in one or more accounts
Banking Company or Co-operative Bank or  Post Master General or
Nidhi company or 
NBFC
One or more time deposits(other than one made through renewal of another time deposit) of a person  Aggregating to Rs.10 lakh or more in a financial year
Company or Institution issuing bonds or debentures Receipt from any person for acquiring debenture/bonds issued by company/institution(other than amount received for renewal of the bond/debenture issued) Amount aggregating Rs. 10 lakhs or more in a financial year
Company issuing shares Receipt from any person acquiring shares(including share application money) issued by company  Amount aggregating Rs. 10 lakhs or more in a financial year
Listed Company (listed on a recognised stock exchange) purchasing its own securities u/s 68 of Companies Act 2013 Buyback of shares from any person (other than shares bought in open market) Amount or value aggregating to Rs. 10 Lakhs or more in a financial year
Trustee of a Mutual Fund or such other person managing the affairs of the MF Amount received for acquiring units of one or more schemes of mutual fund(other than amount received on account of tranfer from one scheme to another) Receipt from any person of an amount aggregating to Rs. 10 lakhs or more in a financial year 
Authorized Person under FEMA(Dealer, Money Changer, Off-shore Banking Unit or any other person defined in FEMA, 1999) Receipt from any person from sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through credit or debit card or through issue of travellers cheque or draft or any other instrument Aggregate amount to  10 Lakh or more in a financial year
Inspector-General/Registrar/ Sub-Registrar appointed under Registration Act, 1908 Purchase or sale by an person of immovable property  Amount of Rs. 30 lakh or more or valued by stamp duty valuation authority referred to in section 50C at Rs. 30 lakh or more
Banking company or a co-operative bank or any other company or institution issuing a credit card Payment made by any person, against bills raised in respect of one or more credit card issued to that person   Aggregate amount of

  1. Rs. 1 lakh or more in cash 

Or

  1. Rs. 10 lakh or more by any other mode
Banking Company or Co-operative Bank or Postmaster General Cash deposits during 09th November, 2016 to 30th December, 2016 Amount aggregating to 

  1. Rs. 12.50 lakh or more, in one or more current account of a person
  2. Rs. 2.50 lakh or more, in one or more accounts (other than a current account) of a person
Banking Company or Co-operative Bank or Postmaster General Cash deposits during 01st April, 2016 to 09th November, 2016 In respect of accounts that are reportable in the just above point.

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).

 

what is the Due date to file Form 61A ?

he statement of the financial transaction shall be furnished on or before the 31st May immediately following the financial year 

What is the penalty for not filing?

If a person required to furnish a statement of financial transaction under section 285BA fails to furnish such statement :

  1. Within the time prescribed – Such person shall liable to pay the penalty u/s 271FA of Rs. 500 for every day during which such failure continues.
  2. After issuing of notice to file a statement under section 285BA – Such person shall be liable to a penalty u/s 271FA, of Rs. 1000 per day starting from the day immediately following the day on which the time specified in the notice for furnishing statement expires till the the day failure continues.
    If a person to whom a notice is issued to file the statement then such person is required to file such a statement within 30 days from the date of service of such notice

What is the Procedure to Submit SFT ? 

  • Login to the e-filing portal and go to my account, then move to Manage ITDREIN (Income Tax Department Reporting Entity Identification Number)
  • Click and ‘Generate New ITDREIN.’
  • Select the type of form and Reporting entity category and then Click and Generate ITDREIN.
  • Then an ITDREIN will be generated and also a confirmation email, and SMS will be sent to the registered email id and mobile number, respectively.
  • The generated ITDREIN will appear under My Account
  • Upload Form X along with the Digital Signature.
  • Verify by entering PAN no, Form Name, Financial Year, Reporting entity category, Half-year, upload type, etc.
  • The uploaded file will either get accepted or rejected.

https://www.incometaxindia.gov.in/forms/income-tax%20rules/itform61anew.pdf

 

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