Taxpayers need to adhere to various compliance requirements every month. They are required to c...
Under section 285BA of the Income Tax Act, 1961, an SFT (Statement of Financial Transaction) or (Specified Financial Transactions) is a report which is filed by ‘specified persons’ recording transactions which exceed the threshold limit including the investment and expenditure done by the taxpayers in a Financial Year.
These specified persons registering, recording and maintaining these SFTs are under a mandate to submit SFT to the Income Tax Authority or any other specified agency or authority.
According to the existing reporting system, information regarding the high value transactions recorded in SFTs was shared by the Banks and Financial Systems with the tax authorities.
A new form was released by the government in the year 2020 called form 26AS which included high value transactions from SFTs which would be visible to the taxpayer.
Following are the specified transactions that are required to be reported:
SFTs are filed either in the Form 61B (prescribed reporting financial institutions) or in the Form 61A (other reporting entities).
SFTs are filed electronically under a digital signature certificate to the Director of Income Tax (Intelligence and Criminal Investigation) of the Joint Director of IT (Intelligence and Criminal Investigation). A Registrar or a Post Master General or an IG may furnish SFT in a computer readable media such as a CD or DVD along with verification in Form V on paper.
The government mandates the following persons to make compulsory filing of returns:
The government has decided that the last date for filing of SFT under Form 61A is on or before 31st May of the financial year immediately following the financial year in which the transactions are registered or recorded. For example, for the transactions made in the financial year of 2021-2022, the due date for furnishing of SFTs is 31st of May, 2022.
Similarly, the statement of reportable account in Form 61B shall be furnished by the prescribed financial institution for every calendar year on or before 31st of Mat of the next year.
If the concerned Income Tax Authority finds the SFT to be defective, the same shall be intimated to the reporting entity/person by such authority. An opportunity shall be given for rectifying the defect within a period of 30 days from the date of intimation. This due date of rectification can be extended at the discretion of the Income Tax Authority on the basis of an application made on this behalf.
If the person fails to make rectify the defects within the period of 30 days or the extended period, then the said statement shall be treated as invalid and the consequences of failure to submit SFT shall be applicable.
Where the concerned person fails to furnish SFT within due date, the prescribed income tax authority serves a notice upon that person to furnish SFT within a period of 30 days from the date of service of notice and the concerned person has to furnish SFT within the time limit specified in the notice. If the concerned person fails to make a payment within the original due date, a penalty of Rupees 500 is imposed for every day of default. Further, if the SFT is not furnished within the extended period provided in the notice served upon the concerned person, then a penalty of Rupees 1000 shall be levied from the day immediately after the day on which the specified time in notice expires.