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SFT – Statement of Financial Transaction

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Laxmi Navlani

Income Tax
ITR Forms & Documents
SFT
Last updated on April 14th, 2021

Statement of Financial Transaction – SFT consists of certain specified financial high-value transactions undertaken by citizens that the Government proposes to track, with an intent to curb black money and widen the tax base in India.
The Government of India requires certain specified persons and entities to report high-value transactions undertaken by citizens to the Income Tax department.
Such specified persons were required to submit ‘Annual Information Return (AIR)’ introduced in 2003 with respect to specified financial transactions under Section 285BA.

What is SFT?

SFT is a report of specified financial transactions specified persons need to submit to the to the income tax authority or such other specified authority or agency.

Also, as per section 285ba of Income Tax Act, specified persons who need to register, maintain or record such specified financial transaction are under an obligation to submit SFT.

Specified transactions required to be reported in SFT or Statement of Financial Transaction

Financial transaction under Section 285BA are as follows:

Specified persons required to report such transactions

Following persons shall be required to furnish statement of financial transactions or reportable accounts registered or recorded or maintained by them during a financial year to the prescribed authority:

When the transactions are required to be reported?

Section 285BA authorizes CBDT to prescribe values for specified financial transactions.
Moreover, based on such specified value of different nature of transactions, specified persons need to report the same in SFT.
The nature and value of transactions prescribed by CBDT via Rule 114E is given below:

Sr No Nature of transaction to be reported Monetary Threshold limit Specified person required to submit SFT
1

Cash payment for purchase of bank drafts or pay orders or banker’s cheque

Payments in cash for purchase of pre-paid instruments issued by Reserve Bank of India

Cash deposits or Cash withdrawals from one or more current account of a person

Aggregating to INR 10 lakh or more in a FY

Amount aggregating to INR 10 lakh or more during the FY 

 

Aggregating to INR 50 lakh  or more in a FY

A banking company or Co-operative bank to which Banking Regulation applies

2

Deposits in one or more accounts other than a current account and time deposit of a person Aggregating to INR 10 lakh or more in a FY A banking company or Co-operative bank to which Banking Regulation applies
Post-Master General of post office
3 One or more time deposits (other than renewed time deposit of another time deposit) of a person Aggregating to INR 10 lakh or more in a FY

(i) A banking company or a co‑
operative bank

(ii) Post Master General

(iii) Nidhi Company

(iv) Non-banking financial company

4 Credit card payments made by any person either in cash or by any other mode in a FY. Aggregating to INR 1 lakh or more in cash or INR 10 lakh or more by any other mode in a FY A banking company or Co-operative bank to which Banking Regulation applies or any other company or institution issuing credit card
5 Receipt from any person for acquiring bonds or debentures issued by the company or institution (other than renewal) Aggregating to INR 10 lakh or more in a FY A company or institution issuing bonds or debentures
6 Receipt from any person for acquiring shares (including share application money) issued by the company Aggregating to INR 10 lakh  or more in a FY Any company issuing shares
7 Buyback of shares from any person (other than the shares bought in the open market) Aggregating to INR 10 lakh  or more in a FY Listed company purchasing its own securities under section 68 of the Companies Act, 2013
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) Aggregating to INR 10 lakh or more in a FY A trustee of a Mutual Fund or any such other person authorized to manage the affairs of the Mutual Fund
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 travelers cheque or draft or any other instrument Aggregating to INR 10 lakh or more during a FY Authorized person as referred in the Foreign Exchange Management Act, 1999
10 Purchase or sale of immovable property Transaction value or valuation of stamp duty authority referred in Section 50C for an amount of INR 30 lakhs or more. Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.
11 Cash receipt for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10) Exceeding INR 2 lakh Any person who is liable for audit under section 44AB of the Act
12 Cash deposits during the period 09th November, 2016 to 30th December, 2016 Aggregating to INR 12,50,000 or more in one or more current account of a person or INR 2,50,000 or more in one or more account (other than current account) of a person A banking company or Co-operative bank to which Banking Regulation applies
Post Master General of post office
13 Cash deposits during the period 1st of April, 2016 to 9th November, 2016 in respect of accounts that are reportable under Sl.No.12.   A banking company or Co-operative bank to which Banking Regulation applies
Post Master General of post office

Aggregation rule

As it can be seen from the above monetary threshold for specified financial transaction except SI No 10 and 11, aggregation is required to analyze if monetary threshold is being crossed. While aggregating the amount, the following shall be noted:

Forms to be used for furnishing SFT

The statement of financial transaction shall be furnished electronically (under digital signature) in Form 61A to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation).

However, Post Master General or a Registrar or an Inspector General may furnish Form 61A in a computer readable media being a Compact Disc or Digital Video Disc (DVD), along with the verification in Form-V on paper.


What is the Procedure to Submit SFT?

SFT shall be submitted through following procedure:

  1. Generate New ITDREIN

    Log in on e-filing portal and go to My Account> Manage ITDREIN (Income Tax Department Reporting Entity Identification Number)
    Select form type and Reporting entity category and click on ‘Generate ITDREIN’
    Based on this selection, appropriate ITDREIN will be generated and confirmation email and SMS will be sent to registered email id and mobile number respectively
    ITDREIN generated will now appear under My Account>Manage ITDREIN

  2. Prepare Form

    Go to e-file>Upload Form ‘xxx’ (appropriate Form No appears based on the selection made during registration)
    Verify/enter PAN, Form Name, FY, Reporting entity category, Half year, upload type i.e., whether original/correction form /Nil statement

  3. Upload the file

    On successful validation of above details, upload the file along with digital signature certificate

Success message will be displayed on the screen on successful uploading and confirmation email and SMS will be sent to registered email id and mobile number respectively

Uploaded file may be either ‘accepted’ or ‘rejected’. In case of rejection, reason for rejection would be mentioned and correction form shall be submitted through above procedure

Due date of furnishing SFT

The statement shall be furnished on or before 31st May immediately following the financial year in which the transaction is registered or recorded.

Information under SI No. 12 and 13 in the Table being related to demonetization period, the due date was 31 January 2017
Tip
Information under SI No. 12 and 13 in the Table being related to demonetization period, the due date was 31 January 2017

Inaccurate or defective statement of financial transaction

If any person, after filing the statement, comes to know or discovers any inaccuracy in the information provided in the statement, he shall inform such inaccuracy to the prescribed income-tax authority within a period of ten days and furnish the correct information.

On the other hand, the prescribed income-tax authority may also intimate the defect to the person and give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or within such extended period as may be allowed by prescribed income-tax authority.

Non-furnishing of statement of financial transaction or reportable account will attract penalty under section 271FA. Penalty can be levied of Rs. 500 per day of default

In case of non-furnishing of SFT within due date, the prescribed income-tax authority may serve notice upon such person requiring him to furnish SFT within a period not exceeding 30 days from the date of service of such notice and he shall furnish the statement within the time specified in the notice.

If person fails to file the statement within the specified time, then a penalty of INR 1,000 per day will be levied from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.

FAQs

What is the remedy available if inaccurate information is submitted in the SFT?

If any person, after filing the statement, comes to know or discovers any inaccuracy in the information provided in the statement, he shall inform such inaccuracy to the prescribed income-tax authority within a period of ten days and furnish the correct information.

What if SFT is not rectified within the due date as mentioned in the intimation sent by concerned income-tax authority for defects in SFT?

If defect is not rectified within such period, such statement shall be treated as invalid and consequences of non-furnishing of SFT shall apply

Is it mandatory to file nil return also?

Nil Statement is not mandatory but to stay on the safer side an assessee should consider filing the SFT (Statement of Financial Transactions).

Got Questions? Ask Away!

  1. Hey @TeamQuicko

    Thanks for the blog! Just one quick question - Why do we have to report a quarterly breakdown of Dividend Income under IFOS?

    Thank you!

  2. I had received dividend recently but I had noticed that TDS had been deducted. any idea as to why has it happened and is there a way I can claim this TDS?

  3. Hey @HarshitShah

    After the introduction of Budget 2020, dividend income is now taxable in the hands of the shareholder; and is also subject to TDS at 10% in excess of INR 5000 u/s 194 & 194K. Foreign Dividend is taxable at slab rates. TDS is not applicable to such dividends. The taxpayer should report such income under the head IFOS in the ITR filed on the Income Tax Website.

    Hope this helps!

  4. Hi @ameyj

    The amount of TDS deducted shall reflect in your Form 26AS only and it will also reflect the name of the deductor.
    Using the name of the deductor you can find out on which share you have received the dividend and you can also cross-check the same in your bank statement.

    Yes, you are right, TDS is to be deducted when the dividend paid exceeds 5000 INR in a financial year. However, the 5,000 INR limit pertains to all the dividends an individual gets in a year, or the total dividend per shareholder that a company pays out in a year, is left to interpretation, and hence registrars and share transfer agents (RTA) are not taking any chances and are deducting TDS even on small amounts.

    Hope this helps :slightly_smiling_face:

  5. Hi @TeamQuicko

    Consider that I have 10 shares each of 10 different Indian companies. Each of the 10 companies are declaring a dividend of INR 100 before the FY ends. Now I will be recieving 1000 as dividend from each company, thereby a total of 10,000.

    The 5,000 dividend limit, is it applicable to each company / total dividend recieved by me in a year. If it is applicable to each company, then I would not attract TDS of 10% for dividend.

    Also pl clarify, how would the company B know that I have got shares of Company A,C,D,E so on…

  6. Hey @Abdul_Kaleem_shah

    As per sec.194 of income tax act, TDS liability will arise when the amount of such dividend or the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, exceeds 5000 Rs.

    Here, the term company not includes aggregate companies and hence limit of 5000 Rs. should be applicable to each company.

    Here, you can read below article covering TDS on dividend income:

    Since, it is purely based on interpretation and ambiguous as opinion vary from experts.

  7. Hey @TeamQuicko

    I tried to file ITR-3 via Quicko’s integration with Zerodha. While filing the ITR, I got an option to switch to the New Tax regime to save additional taxes.
    Since I had some turnover from intraday and FnO (speculative/ business), am I eligible to switch to the new regime through Quicko while filing?
    How do I fill the Form 10-IE? If I haven’t filled the form, would the portal preent me from filing returns altogether?
    Also, once I get rebate (if opted for new regime) / pay dues (if opted for old regime), do I need to go through the hassles of replicating it on the new ITR portal (i.e manually answering the schedule sections)?

    Kind regards

  8. Hi @ChinmayB,

    Yes, you can opt for the new tax regime. However, keep in mind in case a taxpayer has business income and they opt for the new tax regime, they can switch to the old tax regime only once.

    If you opt for the new tax regime, you need to file Form 10-IE before filing the ITR

    Here’s how you can file the Form 10-IE

    When filing your ITR through Quicko, you do not need to enter details on the new ITR portal, since Quicko is a ERI (e-return intermediary) registered with the Income Tax Department.

    Note: ITR filing will be enabled on Quicko in the coming week. So stay tuned for more exciting features!

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