{"id":31525,"date":"2020-04-28T13:28:31","date_gmt":"2020-04-28T07:58:31","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=31525"},"modified":"2020-04-28T13:55:11","modified_gmt":"2020-04-28T08:25:11","slug":"understanding-the-concept-of-statement-of-financial-transaction","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/understanding-the-concept-of-statement-of-financial-transaction\/","title":{"rendered":"Understanding the Concept of Statement of Financial Transaction (SFT) \u2013 Annual Information Return (AIR)"},"content":{"rendered":"<p class=\"has-drop-cap\">The Income-tax law has structured the concept of statement of financial transaction or reportable account (previously it was called Annual Information Return or AIR) to keep a watch on high-value transactions undertaken by the taxpayer. The tax authorities, with the help of statements, can collect information on certain specified high-value transactions conducted by a person during a year. Specific organisations must file the announcement of <strong><a href=\"https:\/\/enterslice.com\/financial-reporting-services\">financial transactions<\/a><\/strong> or reportable accounts. In this statement, they are required to furnish the details of the particular financial transactions or any reportable account registered or recorded or maintained by them during the year. The income tax department keeps track of the specified financial transactions which are carried on by a person during a year. In this article, we will discuss the various provisions relating to the statement of financial transactions or reportable accounts. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a statement of financial transaction or reportable account?<\/h2>\n\n\n\n<p>According to section 28&#8203;5BA of the Income-tax Act, 1961 substituted by the Finance Act, 2014 with effect from 1 April 2015, the specified entities or Filers are required to furnish a statement of financial transaction or reportable account in respect of some specified transactions or any reportable account registered\/ recorded \/maintained by them during the financial year to the income-tax authority or such other prescribed authority as suggested.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Specified Financial Transaction to be Mentioned in the\nStatement of Financial Transaction?<\/h2>\n\n\n\n<p><strong><em>A specified financial transaction has been classified as follows:<\/em><\/strong><\/p>\n\n\n\n<ol><li>Transactions related to purchase, sale, or exchange of goods, <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>property<\/a>, or right or interest in property.<\/li><li>Transactions made for rendering any service.<\/li><li>Transactions made under works contract.<\/li><li>Transactions made by way of investment or expenditure incurred.<\/li><li>Transactions for taking or accepting any loan or deposit.<\/li><\/ol>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/financial-due-diligence\/\" target=\"_blank\" rel=\"noopener noreferrer\">Financial Due Diligence \/ <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Accounting&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Accounting is the language of business, serving as the backbone of financial management and decision-making. It involves the systematic recording, analysis, and reporting of financial(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/accounting\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Accounting<\/a> Due Diligence<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Who Needs to Furnish Statement of Financial Transaction and Reportable accounts?<\/h2>\n\n\n\n<p>The following person needs to furnish a statement of financial transaction or reportable accounts registered or recorded and maintained by them during the financial year to the prescribed authority:<\/p>\n\n\n\n<ul><li><strong><em>An Assessee or a taxpayer.<\/em><\/strong><\/li><li><strong><em>In the matter of a Government office, the prescribed person.<\/em><\/strong><\/li><li><strong><em>A local authority \/other public body or association of person.<\/em><\/strong><\/li><li><strong><em>The Registrar or sub-Registrar appointed as per Section 6 of the Registration Act, 1908.<\/em><\/strong><\/li><li><strong><em>The Registering authority is empowered to register motor vehicles according to Chapter IV of the Motor Vehicles Act, 1988.<\/em><\/strong><\/li><li><strong><em>The Post Master General, as explained in section 2(j) of the Indian Post Office Act, 1898.<\/em><\/strong><\/li><li><strong><em>The collector is described in section 3(g) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.<\/em><\/strong><\/li><li><strong><em>The recognised stock exchange, as refereed in section 2(f) of the Securities Contracts (Regulation) Act, 1956.<\/em><\/strong><\/li><li><strong><em>An officer appointed by the Reserve Bank of India (RBI) constituted as per section 3 of the Reserve Bank of India Act, 1934.<\/em><\/strong><\/li><li><strong><em>A depository, as referred in section 2(1)(e) of the Depositors Act, 1966.<\/em><\/strong><\/li><li><strong><em>Reporting financial institutions.<\/em><\/strong><\/li><li><strong><em>Any other person other than those mentioned in clauses (a) to (k) as may be prescribed<\/em>.<\/strong><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Nature and Value of Specified Transactions in Statement of Financial Transaction <\/h2>\n\n\n\n<p>According to <strong>Section 285BA<\/strong>, the Central Board of Direct Taxes (CBDT) can prescribe different values with respect to different specified financial transactions for different specified persons having regard to the nature of such transactions. It is also prescribed by CBDT via Rule 114E as enumerated below:<\/p>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td><strong>   <\/strong><em><strong>Nature of   Transaction<\/strong><\/em><strong>   <\/strong><\/td><td><strong>   <\/strong><em><strong>Monetary Limit<\/strong><\/em><strong>   <\/strong><\/td><td><strong>   <\/strong><em><strong>Person Required to   submit Statement of Financial Transaction<\/strong><\/em><strong>   <\/strong><\/td><\/tr><tr><td>   Cash payment made for the purchase of bank drafts or   pay orders or banker&rsquo;s cheque   <\/td><td>   Aggregate to Rs 10 lakh or more in a Financial Year   <\/td><td>   A banking company or any co-operative bank to which   the Banking Regulation Act applies   <\/td><\/tr><tr><td>   Cash payments for purchasing of pre-paid instruments   issued by the Reserve Bank of India (RBI)   <\/td><td>   Aggregate to Rs 10 lakh or more in a FY   <\/td><td>   A banking company or any co-operative bank to which   the Banking Regulation Act applies.   <\/td><\/tr><tr><td>   Cash deposits made in one or more current account of a   person   <\/td><td>   Aggregate to Rs 50 lakh&nbsp; or more in a FY   <\/td><td>   A banking company or any co-operative bank to which   the Banking Regulation Act applies   <\/td><\/tr><tr><td>   Cash withdrawals are made from one or more current   account of a person   <\/td><td>   Aggregate to Rs 50 lakh&nbsp; or more in a FY   <\/td><td>   A banking company or any co-operative bank to which   the Banking Regulation Act applies   <\/td><\/tr><tr><td>   Cash deposits are done in one or more accounts other   than a current account and also time deposit of an individual   <\/td><td>   Aggregate to Rs. 10 lakh or more in a financial year   <\/td><td>   A banking company or any Co-operative bank to which   the Banking Regulation Act applies,   <strong>Post-Master General of post office<\/strong>   <\/td><\/tr><tr><td>   One or more time deposits other than the renewed time deposit   of another time deposit of an individual   <\/td><td>   Aggregate to Rs. 10 lakh or more in a financial year   <\/td><td>\n  Nidhi Company\n  according to Section 406 of the Companies Act, 2013<br>\n  <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;NBFC&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Non-Banking Financial Companies (NBFC) operate similarly to banks but do not possess the legal status of a bank. Registered under the Companies Act 2013 and governed by the RBI Act&amp;#039;s section(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/nbfc\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>NBFC<\/a> holding certificate of registration under\n  the RBI Act and permission&nbsp; to hold or\n  accept deposit from public<strong><\/strong>\n  <\/td><\/tr><tr><td>\n  Credit card payments\n  are made by any person either in cash or by other modes in a financial year.<strong><\/strong>\n  <\/td><td>\n  Aggregate to Rs 1\n  lakh or more in cash or Rs 10 lakh or more by any other mode in a financial\n  year. <strong><\/strong>\n  <\/td><td>   A banking company or any Co-operative bank to which   the Banking Regulation Act applies or   <strong>any other company or organization issuing credit card<\/strong>   <\/td><\/tr><tr><td>\n  Receipt &nbsp;done from any person for acquiring bonds or\n  debentures issued by the institution or &nbsp;company (other than renewal)\n  <\/td><td>\n  Aggregate to Rs 10\n  lakh or more in a financial year\n  <\/td><td>   A company or institution who issues bonds or   debentures   <\/td><\/tr><tr><td>\n  Buyback of shares\n  from any individual (other than the shares bought in the open <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a>)\n  <\/td><td>\n  An aggregate amount\n  of Rs 10 lakh&nbsp; or more in a FY\n  <\/td><td>   Listed company purchasing its own securities as per section   68 of the Companies Act, 2013   <\/td><\/tr><tr><td>\n  The receipt made from\n  any person for acquiring units of one or more schemes of a Mutual Fund\n  <\/td><td>\n  Aggregate of Rs 10\n  lakh or more during a Financial Year.\n  <\/td><td>   A mutual fund trustee or any other person authorised   to manage the affairs of the Mutual Fund   <\/td><\/tr><tr><td>\n  Receipt from any\n  person for the sale of foreign currency, which includes any credit of the\n  currency to foreign exchange card or expense through a debit card or credit\n  card or through the issue of a traveler&rsquo;s cheque \/draft \/another instrument. \n  <\/td><td>\n  Aggregate of Rs 10\n  lakh or more during a financial year. \n  <\/td><td>   Authorised person as mentioned in Section 2(c) of the   Foreign Exchange Management Act, 1999    <\/td><\/tr><tr><td>\n  Purchase or sale of\n  the immovable property\n  <\/td><td>\n  The transaction value\n  \/valuation of stamp duty authority as referred to in Section 50C for an\n  amount of Rs 30 lakhs or more.\n  <\/td><td>   An Inspector-General appointed as per section 3 of the   Registration Act, 1908 or Registrar or Sub-Registrar appointed under section   6 of that Act.   <\/td><\/tr><tr><td>\n  The cash receipt for\n  sale done by any person regarding the goods or services of any nature.\n  <\/td><td>\n  Exceeding Rs 2 lakh\n  <\/td><td>   Any person who is liable for an audit according to   section 44AB of the Act    <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\">Which forms are to be used for furnishing of Statement of Financial\nTransactions?<\/h2>\n\n\n\n<ul><li>Statement of Financial Transaction (SFT) is to be submitted either in Form 61A (other reporting entities) or Form 61B (prescribed reporting financial institution).<\/li><li>SFT is to be submitted electronically, under the digital signature certificate to the <strong><a href=\"https:\/\/www.incometaxindiaefiling.gov.in\/home\">Director of Income-tax<\/a><\/strong> (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation). <\/li><li>A Post Master General \/Registrar \/ Inspector General may furnish SFT in a computer-readable media being a Compact Disc or Digital Video Disc (DVD), along with the verification in Form-V on paper.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Procedure to Submit the Statement of Financial Transaction?<\/h2>\n\n\n\n<p>The\nfollowing listed procedure must be adopted to submit the Statement of Financial\nTransaction (SFT):<\/p>\n\n\n\n<ul><li><em>Login to the e-filing portal and go\nto my account, then move to Manage ITDREIN (Income Tax Department Reporting\nEntity Identification Number)<\/em><\/li><li><em>Click and &lsquo;Generate New ITDREIN.&rsquo;<\/em><\/li><li><em>Select the type of form and\nReporting entity category and then Click and Generate ITDREIN.<\/em><\/li><li><em>Then an ITDREIN will be generated\nand also a confirmation email, and SMS will be sent to the registered email id\nand mobile number, respectively.<\/em><\/li><li><em>The generated ITDREIN will appear\nunder My Account <\/em><\/li><li><em>Upload Form X along with the Digital\nSignature.<\/em><\/li><li><em>Verify by entering PAN no, Form\nName, Financial Year, Reporting entity category, Half-year, upload type, etc.<\/em><\/li><li><em>The uploaded file will either get\naccepted or rejected.<\/em><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Due date of Filing of Statement of Financial Transaction<\/h2>\n\n\n\n<p>The Statement of Financial Transaction (SFT) must be filed in\nForm 61A shall be submitted on or before 31 May of the Financial Year,\nimmediately preceding the FY in which the transaction is recorded or\nregistered.<\/p>\n\n\n\n<p>A statement of reportable account is to be submitted in <strong>Form 61B<\/strong> shall be submitted by prescribed reporting financial institution for every calendar year on or before 31 May of next year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Remedy if there is a Defect in the Submitted Statement of\nFinancial Transaction?<\/h2>\n\n\n\n<p>In case, if the\nconcerned income tax authority considers the SFT to be defective, they shall be\nintimated by the reporting entity or person by such authority. The authority\nshall provide an opportunity to rectify the defect with a time span of 30 days\nfrom the date of receiving such intimation. This due date can further be\nextended for rectification of default by the income tax authority at his\ndiscretion on an application made in this behalf. However, if within 30 days\nthe defect is not rectified, such a statement will be treated as invalid, and\nthe consequences of non-filing of SFT shall apply here.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consequences of Failure to fulfill the Terms of Section 285BA and its related Rules<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Failure to furnish SFT<\/h3>\n\n\n\n<ul><li>If the person fails to furnish the\nstatement of financial transactions within the due date, the authorised\nincome-tax authority may serve notice to such person asking him to furnish the\nSFT within a period not exceeding 30 days from the date of service of such\nnotice. The person shall furnish the statement within a time specified in the\nnotice. <\/li><li>If the SFT is not furnished by the\nreporting person within the original due date, a penalty of Rs, 500 per day\nwill be charged as default fees. Further, if no report is filed even within the\nextended due date specified in the notice served upon the person, a penalty of\nRs. 1000 per day will be charged from the day immediately following the day on\nwhich the specified time in the notice expires.<\/li><li>From the date of expiry of the original\ndue date mentioned in the notice, and overall penalty of Rs. 500 per day will\nbe fixed and Rs. 1000 per day beyond the due date, as specified in the notice\nserved.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Inaccurate information in the &nbsp;Statement\nof Financial Transaction<\/h3>\n\n\n\n<p>Any\nindividual furnishing SFT, discovers any inaccuracy in the information provided\nin the statement, he needs to inform the inaccuracy in the statement and must\nfurnish the correct information to the income-tax authority or agency or any\nspecified authority within a time span of 10 days.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Special provision for penalty in case of prescribed reporting financial\ninstitution<\/h3>\n\n\n\n<p>A penalty will be charged with amount Rs\n50,000 on prescribed reporting financial institution, in case it provides &nbsp;any inaccurate information in the statement\nwhere:<\/p>\n\n\n\n<ul><li>The person is responsible for inaccuracy because of his failure to comply with the prescribed due diligence.<\/li><li>The person who knows of the inaccuracy during the furnishing of the statement of financial transaction (SFT) or reportable account, but does not inform the prescribed income-tax authority or such other authority or agency.<\/li><li>If the individual finds the inaccuracy after the statement of financial      transaction or reportable account is furnished and fails to inform and      furnish correct information within ten days as mentioned above<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>The statement of financial transactions is submitted to check the accuracy of the transactions done. By <strong>filing form 61A<\/strong>, a person can declare that the money he owns is not black money. The Ministry of Finance has been working along with the Government of India to curb down the black money and also to widen the tax base. It has introduced various initiatives in this regard. One such initiative is to cast an obligation on the Government agency and also other authorities to provide a reliable source of information to report the high-value transactions. The specified persons were required to <strong><a href=\"https:\/\/enterslice.com\/learning\/steps-for-filing-of-annual-return-as-per-companies-act-2013\/\">submit the Annual Information Return<\/a><\/strong> (AIR) introduced in 2003 with respect to specified transactions under section 285BA. <\/p>\n\n\n\n<div class=\"read\"><p><b>See Our Recommendation:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/corporate-compliance-calendar-for-april-2020\/\" target=\"_blank\" rel=\"noopener noreferrer\">Corporate Compliance Calendar For April 2020<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Income-tax law has structured the concept of statement of financial transaction or reportable account (previously it was called Annual Information Return or AIR) to keep a watch on high-value transactions undertaken by the taxpayer. The tax authorities, with the help of statements, can collect information on certain specified high-value transactions conducted by a person [&hellip;]<\/p>\n","protected":false},"author":27,"featured_media":31529,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1314],"tags":[2957],"acf":{"service_id":"230"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Understanding the Concept of Statement of Financial Transaction (SFT)<\/title>\n<meta name=\"description\" content=\"The Income-tax law has structured the concept of statement of financial transaction or to keep a watch on high-value transactions undertaken by the taxpayer.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/understanding-the-concept-of-statement-of-financial-transaction\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Understanding the Concept of Statement of Financial Transaction (SFT)\" \/>\n<meta property=\"og:description\" content=\"The Income-tax law has structured the concept of statement of financial transaction or to keep a watch on high-value transactions undertaken by the taxpayer.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/understanding-the-concept-of-statement-of-financial-transaction\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-04-28T07:58:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-04-28T08:25:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Statement-of-Financial-Transaction.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Deepti Shikha","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/Deepti-Shikha.jpg","authorDescription":"Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. She has enough experience in handling legal affairs of the company. In the initial days of her career, she has worked as a legal researcher and has 3+ years of experience.","postViews":526,"readingTime":7,"nextPost":{"id":31491,"slug":"impact-of-covid-19-on-nbfc-businesses-in-india"},"prevPost":{"id":31502,"slug":"special-notice-resolutions-resolutions-requiring-special-attention"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Statement-of-Financial-Transaction.jpg","postTerms":"Finance &amp; Accounting","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/31525"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=31525"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/31525\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/31529"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=31525"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=31525"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=31525"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}