Persons or entities that affect high-value transactions and are liable for an audit of their financial accounts before filing their yearly income tax returns are subject to use Form 61A to make declarations as per Section 44AB of the Income Tax Act 1962. Form 61A or Statement of Specified Financial Transactions (SFT) is a format for representing the statement of these specialised financial transactions the taxpayer has undertaken. Individuals and entities operating in India, off-shore banking units, authorised dealers, money changers, and others, as defined by the RBI in the Foreign Exchange Management Act (FEMA, 1999), are also liable to file Form 61A annually.
To monitor high-value transactions undertaken by taxpayers, the Income Tax Act (ITA) established a process for taxpayers to present their Statement of Financial Transactions (SFT), which was formerly also known as Annual Information Return (AIR). The reporting individuals are required to provide information about their high-value transactions under Section 285BA of the Income-Tax Act.
According to Rule 114E of the Income Tax Rules of 1962, this statement must be provided in Form 61A of income tax and must be filed by the notified taxpayer for the relevant financial year on an annual basis. Rule 114E also governs the type of transactions along with their value that will require mentioning in the specific financial transaction statement (enclosed in Annexure A).
The last date for the submission of Form 61A for the prior financial year (FY) is before May 31st of the relevant assessment year (AY). Hence, one needs to file Form 61A before 31st May 2022 for the Specified Financial Transactions undertaken in Financial Year 2021-22. Read on to find out more about Form 61A.
Form 61A requires one to furnish the following details and consists of these key sections:
Also Read: Step-by-Step Guide To File ITR 4 Form For AY (2022-23)
|Entities or individuals who are required to furnish Form 61A||Transaction type||Transaction Limit|
|Banking Companies and Co-operative Banks||Cash payment made towards the purchase of POs (Purchase orders) or DDs (Demand drafts)||More than Rs. 10 lakhs annually|
|Banking Companies and Co-operative Banks||Cash payment made towards purchasing any prepaid Reserve Bank of India (RBI) instruments such as RBI bonds, etc.||More than Rs. 10 lakhs|
|Banking Companies and Co-operative Banks||Withdrawals/Deposits from a current account of an account holder||More than Rs. 50 lakhs|
|Banking Companies, Co-operative Banks, and Post Offices||Deposits in 1 or more accounts of an account holder||More than Rs. 10 lakhs|
|Banking Company, Co-operative Bank, Postmaster General of Post Office||Total cash payment in a year against any credit card bill which is issued to a customer in a year||More than Rs. 1 lakh|
|Banking Company, Co-operative Bank, Postmaster General of Post Office||Total online payment of any credit card bill which is issued to a customer in a year||More than Rs. 10 lakhs|
|An institution or a company issuing debentures or bonds||Receipt from a person for acquiring such bonds or debentures||More than Rs. 10 lakhs in a year|
|A company issuing shares||Receipt from a person for acquiring such shares. This includes the amount of share application money received.||More than Rs. 10 lakhs in a year|
|Listed companies||Share buy-back from an individual||More than Rs. 10 lakhs|
|A Mutual Funds’ Manager/Trustee||Receipt from a person acquiring the units of such Mutual Fund||More than Rs. 10 lakhs|
|A Dealer of Foreign Exchange||Receipt from a person for sale of foreign currency or expenses incurred in such foreign currency through a credit/debit card or by the issue of draft or traveller’s cheque or some other financial instrument||More than Rs. 10 lakhs annually|
|Inspector-General/Sub-Registrar appointed under the Registration Act, 1908||Purchase/sale of immovable property by an individual||More than Rs. 30 lakhs|
|Persons that are liable for audit under Section 44AB of the Income Tax Act (ITA)||Cash receipt for the sale of goods or provision of services (apart from the ones mentioned above)||More than Rs. 2 lakhs|
All Specified Financial Transactions carried out within a financial year are listed on Form 61A. This assists the income tax department in identifying high-value transactions and preventing potential tax evasions. Furthermore, having access to these documents would make it easier for individuals and organisations to keep track of high-value specified financial transactions for their personal records.
For every previous financial year when the transaction occurred, a Statement of Financial Transactions must be provided by May 31st of the following year.
For the initial failure to file the Statement of Financial Transactions by the deadline, i.e., May 31st, a penalty under Section 271FA of Rs 500 per day shall be levied. The concerned individual would receive a notice from the relevant authorities demanding that it be submitted within 30 days of receiving the notice by the taxpayer. If the assessee continues to default by not responding to the notice, a penalty of Rs 1000 per day of default would be imposed, which shall be calculated from the expiry of the period stipulated in the notice.
Suppose the reporting entity or individual finds any discrepancy or inaccuracy in the information furnished in Form 61A. In that case, they must contact the concerned income tax authority within ten days of filing to rectify the errors without getting penalised.
On the other hand, if the income tax authorities discover that the data provided on Form 61A is inaccurate or lacking, they will notify the reporting entity or individual, who has 30 days after receiving notice to rectify the information provided.
The Income Tax Act lists the following penalties for failing to provide a rectified Form 61A:
Tax authorities may extend the date for rectification of details in the case of default; however, if the reporting individual/entity fails to rectify the information even after receiving the notice, Form 61A is treated as invalid.
Also Read: Section 285BA of Income Tax Act: Overview, Aggression Rule, How To Submit And More
The government uses Form 61A to keep track of high-value transactions and identify entities and personnel involved in such transactions. This helps them prevent possible tax evasion proactively.
An individual or entity conducting high-value transactions and whose business is liable for audit before tax filing must file Form 61A with the tax authorities. Access to these documents also makes it easier for individuals and organisations to keep track of high-value specified financial transactions for their records. The last date to file Form 61A to the concerned tax authorities for the relevant financial year is May 31st.
Ans. Reporting Person/Reporting entity is who is required to furnish a Statement of Financial Transaction.
Ans. For every previous financial year when the transaction occurred, a Statement of Financial Transactions must be provided by May 31st of the following year.
Ans. Form 61A is further divided into statement details and report details. Part A which contains statement-level information is common to all types of transactions. The report level information has to be reported in one of the following parts (depending on the type of transaction):
Part B (Person-Based Reporting)
Part C (Account-Based Reporting)
Part D (Immovable Property Transaction Reporting)
Ans. Yes, a penalty of Rs. 500 per day is levied upon the concerned entity or individuals from the expiry of the original due date till the due date which is mentioned in the default notice because of providing incorrect information. In the event that the entity/individual continues to remain in default beyond the due date specified in the notice, the penalty per day increases to Rs. 1000.
|Section 194IB||Section 44AA||Section 80E|
|Section 195||Section 80EEA||Section 80DD|
|Section 80CCC||Section 80GG||Section 80 G|
|Section 54F||Section 1941A||Section 10|
|Section 194Q||Section 192||Section 269SS|
|Section 80DDB||Section 44AD||Section 194C|
|Section 194A||Section 194H||Section 80D|
|Section 80C||Section 80C, 24(b), 80EE & 80EEA||Section 234A|
|Section 50C||Section 80C||Section 80EEA|
|Section 194B||Section 194J||Section 206C|
|Section 80CCG||Section 80 EEB||Section 24Q|
|Section 40b||Section 194C||Section 54EC|
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