Form 61A: Sections And Specified Financial Transactions (SFT) In Form 61A
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.
What is Form 61A?
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.
Key Sections of Form 61A
Form 61A requires one to furnish the following details and consists of these key sections:
- Full Name
- Address
- Folio Number
- PAN – Permanent Account Number
- Financial year (FY) in which the transactions are recorded
- Number of Specified Financial Transactions
- Total Value of Specified Financial Transactions undertaken in the given financial year
- Transaction details, including the name of parties involved, date of transactions, PAN details of the transacting party, their full address, the transaction amount, mode of transaction, the transaction code, and so on.
Also Read: Step-by-Step Guide To File ITR 4 Form For AY (2022-23)
What are the Specified Financial Transactions to be reported in Form 61A?
| 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 |
What is the Utility of Form 61A?
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.
Due Date to File Form 61A
For every previous financial year when the transaction occurred, a Statement of Financial Transactions must be provided by May 31st of the following year.
Penalties for Not Submitting Form 61A
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.
Consequences of Filing Defective Form 61A
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:
- Reporting institutions and individuals who deliberately provide incorrect information are subject to a fine of Rs. 50,000.
- Reporting entities and individuals who discover an error in the data after filing the statement but fail to notify the appropriate authorities and provide the updated information within 10 days are subject to a fine of Rs. 50,000.
- 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 mentioned in the default notice because of providing incorrect information. If the entity/individual continues to default beyond the due date specified in the notice, the penalty per day increases to Rs. 1000.
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
Final Words
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.
FAQs on Form 61A
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)
Q4. Are there any penalties if one fails to adhere to the due date?
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.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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