SFT- Statement of Financial Transaction
A small guide on Statement of financial transaction
In this post, we will talk about SFT- statement of financial transaction; let’s look into each section in detail :
- What is a Statement of Financial Transaction (SFT)?
- Transactions Required to be Reported under SFT
- Format of SFT
- Preparation of Data File for Submission of SFT
- Procedure for Submission of SFT on Reporting Portal
- Due Date of Furnishing SFT
- Consequence of Furnishing Inaccurate or Defective Information in SFT
- FAQs
What is a Statement of Financial Transaction (SFT)?
Filers must provide a statement of financial transactions or a reportable account for each defined financial transaction. Such reported information will be reflected in the taxpayer’s AIS (Annual Information Statement). This allows the taxpayer to identify all transactions reported to the income tax department and file their ITR appropriately.
It enables the IT department to keep track of transactions and prevent fraudulent activities.
Transactions Required to be Reported under SFT
The following financial transactions are required to be submitted under Section 285BA:
- Purchase, sale, or exchange of products, property, or rights or interests in a property.
- Transaction to perform any service.
- Transaction involving an investment made or expenditure incurred.
- Transaction to take or accept any loan or deposit.
Format of SFT
Form 61A consists of several parts:
Part A: This part asks for general information about transactions. It includes details about the reporting entity, the Statement, and the main office.
Part B: Here, you report on financial transactions by individuals. You’ll need to provide a report number, a person’s details, and a summary and details of the financial transactions.
Part C: This part reports bank or post office account details. It’s based on accounts, so you must include a report number, account details, a summary, and a person’s details.
Part D: This section is for reporting transactions involving immovable property. You’ll need to provide a report number, transaction details, and person’s details.
Preparation of Data File for Submission of SFT
SFT information must be uploaded as a data file. Reporting entities must prepare a data file in a format their internal system prescribes.
- An Excel-based report preparation tool/Software applciation is also available to help reporting companies prepare data files.
- The data files created by the internal system/report preparation utility should be checked with the Text File Validator/Submission Utility.
- Reporting entities with many data files can also submit them via SFTP Server (specific requests may be made for SFTP upload).
Procedure for Submission of SFT on Reporting Portal
- Login to the income tax e-filing portal >> Pending Action >> Reporting Portal >> Reportable Entities
2. Select New Registration, select the applicable form, and the entity’s category.
3. Complete the Entity Details in Form 61A or Form 61B, and fill in the principal officer information with a digital signature.
4. After submitting the form, the Principal Officer or designated Director will receive an email confirming the successful activation of ITDREN and providing access credentials for the insights portal. You may reset your password using the forgot password feature if you don’t remember it.
After activation of ITDREIN,
- Enter the transaction details in the excel tool/ sofware application and generate the XML output file.
- Download the Report Generation and Validation Utility (Forms 61A, 61B, and Other tools) to create the reporting package.
- Go to Statement and upload the XML file. Select the relevant year and form, then submit using the digital signature.
- Once the return has been submitted and processed, the status will be displayed, and if there is an error, an error report will be generated.
Due Date of Furnishing SFT
SFT in Form 61A must be submitted on or before May 31 of the fiscal year following the year the transaction is documented or registered.
The mandated reporting financial institution must provide a statement of reportable accounts in Form 61B for each calendar year on or before May 31 of the following year.
Consequence of Furnishing Inaccurate or Defective Information in SFT
If you miss the deadline for submitting your financial transaction statement (SFT), the tax authorities may notify you to submit it within 30 days. If you still do not submit it, you will be penalized Rs 500 daily.
If you ignore the notification and do not submit the SFT, the penalty increases to Rs 1,000 each day after the extended date specified in the notice. So, you’ll be charged Rs 500 daily for the first deadline and Rs 1,000 daily after that.
That concludes this blog post on SFT (Statement of financial transaction); please leave a comment if you have any further questions or concerns.
FAQs
1. What is the due date to submit SFT or reportable accounts?
Ans: The SFT must be submitted on or by May 31, the next fiscal year in which the transaction occurred.
2. Is Form 61A mandatory to file?
Ans: Specific entities under Section 285BA must file Form 61A for specific financial transactions.
3. Explain Rule 114E.
Ans: Rule 114E of the Income Tax Rules, 1962, prescribes the structure of Form 61A, which is used to file the Statement of Specified Financial Transactions (SFT) or reportable accounts under Section 285BA(1).
