As per Section 285BA of the Income Tax Act, certain specified government agencies and other entities are obligated to present a statement of financial transactions (SFT). Through the provisions of this Section, the Indian government seeks to observe certain high-value payments undertaken by a taxpayer in a particular financial year.
Know about the provisions of Section 285BA in the following sections.
A statement of a financial transaction includes information concerning various high-value transactions carried out by a few specified entities.
These specified entities that are required to file this statement fall under the mandate of the Income Tax Department or some other specific agency or authority. Thus, depending on the information provided by such entities, the IT department keeps track of certain transactions carried out during a particular financial year. The primary idea behind this initiative was to curb the accumulation of black money in the country.
Section 285BA of the Income Tax Act prescribes values for the nature of transactions that need to be reported by specified entities.
The following table provides details regarding the nature and value of a transaction for which certain persons need to submit SFT:
|Sl. No.||Nature of transaction||Value of Transaction||Specified Person|
|1||Cash payment to purchase banker’s cheque, pay orders or bank drafts||Rs. 10,00,000 or more||Banking company or co-operative bank|
|2||Cash payments to buy pre-paid instruments provided by the RBI||Rs. 10,00,000 or more||Banking company or co-operative bank|
|3||Cash withdrawals made from a person’s one/multiple current accounts or deposits made to such accounts||Rs. 50,00,000 or more||Banking company or co-operative bank|
|4||Cash deposits made to one or more accounts of a person (except time deposits and current account)||Rs. 10,00,000 or more||Post Master General Banking company or co-operative bank|
|5||Time deposits other than the ones made through renewing another time deposit||Rs. 10,00,000 or more||NBFC Nidhi company post Master General Banking company or co-operative bank|
|6||Payments for bills of one or more credit cards||Rs. 1,00,000 or more in cash |
Rs. 10,00,000 or more through other modes
|A co-operative bank or a banking company or any other agency issuing credit cards|
|7||Receipt for acquiring debentures or bonds issued by a company||Rs. 10,00,000 or more||An institution issuing debentures and bonds|
|8||Receipt for share acquisition issued by a company||Rs. 10,00,000 or more||A company that issues shares|
|9||Share buyback from any person||Rs. 10,00,000 or more||Companies listed on recognised stock exchanges buying their own shares under Section 68 of the Companies Act|
|10||Receipt for acquiring units of mutual funds||Rs. 10,00,000 or more||Any person managing mutual fund affairs|
|11||Receipt for sale of foreign currency (this includes credit of the currency to the foreign exchange or expense arising in debit or credit card or by issuing a traveller’s cheque or any other instrument)||Rs. 10,00,000 or more||Authorised personnel under the Foreign Exchange Management Act|
|12||Sale or purchase of an immovable property||Rs. 10,00,000 or more or valued by the stamp duty authority at Rs. 30,00,000 or more||Registrar, sub-registrar or inspector general under the Registration Act|
|13||Receipt on sale of goods or services||Rs. 2,00,000 or more||Any entity liable for audit|
|14||Cash deposits made during November 9 2016 – December 30 2016||Rs. 12,50,000 or more in current accounts of a personRs. 2,50,000 or more in the account of a person (excluding current accounts)||Banking company or co-operative bankPostmaster General|
|15||Cash deposits made during April 1 2016 – November 9 2016||Same as above||Banking company or co-operative bankPostmaster General|
Financial transactions required to be reported under Section 285BA of the Income Tax Act are as follows:
As evident in the table above, aggregation is needed to know whether a monetary threshold is being crossed or not (except for columns 12 and 13). While aggregating the amount, one must note the following:
You can submit the statement of financial transaction in either of the following forms:
You must also note that you need to submit this information electronically. However, a Postmaster General or Inspector General or a Registrar might submit SFT in the form of a computer-readable media.
Also Read: Section 44AD Of Income Tax Act
You can submit SFT by following these simple steps:
Step 1: Log in to the e-filing portal and under the ‘My Account’ tab, click on ‘Manage ITDREIN’.
Step 2: After that, click on ‘Generate New ITDREIN’.
Step 3: Choose the reporting entity category and the type of form to proceed.
Step 4: The ITDREIN will be generated, and you will receive a confirmation mail on your registered email ID and mobile number.
Step 5: After that, navigate to the e-file and click on ‘Upload Form XYZ’.
Step 6: Verify your PAN, reporting entity category, name, FY and more.
Step 7: Upload the form with the digital signature.
Following this, you will see a success message on the screen. Besides, you will also receive a confirmation SMS and email on your mobile number and email ID.
As per Section 285BA of the Income Tax Act, entities need to submit SFT in Form 61B for a calendar year on or before May 31 of the upcoming year.
Moreover, Form 61A needs to be submitted by the prescribed entities or institutions on or before May 31 of the financial year following the financial year in which the transaction took place.
If the Income Tax Department finds the SFT to be defective, the same information shall be provided to the reporting body. Furthermore, the entity receives an opportunity to rectify the defect within 30 days of receiving the intimation.
This due date can be extended further if the entity appeals to the income tax authority. However, this would happen at the sole discretion of the governing body.
Nonetheless, suppose the institution or entity fails to resolve the issue within the due date. In that case, the statement shall be treated as invalid, and the consequences pertaining to non-submission of SFT shall be applicable.
Also Read: Section 80D Of Income Tax Act
If you fail to furnish the SFT within the due date, the Income Tax Department might serve you a notice stating to furnish the information within 30 days. Your failure to furnish SFT within this due date will attract a penalty of Rs. 500 per day. Furthermore, if you do not submit the statement even after the extended due date, you will have to pay a penalty of Rs. 1,000 per day.
Furthermore, specified financial institutions will have to pay a fine of Rs. 50,000 upon providing inaccurate information in the statement.
Certain entities and institutions must be well aware of the provisions under Section 285BA of the Income Tax Act. Furthermore, such persons must furnish the statement before the due date to avoid paying a fine.
Ans: If a specified financial institution discovers inaccuracy in the information present in SFT, he/she shall positively inform the income tax authority about the discrepancy within 10 days. Failing to do so shall attract a penalty.
Ans: The file that you upload might be accepted or rejected by the income-tax authority. In case your file is rejected, you will get the reason for rejection. Following this, you will have to submit a correction form by following the same procedure.
Ans: Such individuals can submit the statement of financial transaction through a computer-readable media mode as opposed to the electronic mode. This includes Digital Video Discs (DVDs) or Compact Discs (CDs) with verification of Form-V on paper.
Ans: During Budget 2021 announcements, the IT Department announced the roll-out of pre-filed income tax returns. As per this rule, agencies such as stock exchanges, clearing corporations, banks, companies, and more will have to report dividend income, capital gains, and interest income.
Ans: Income Tax Department Reporting Entity Identification Number is an identification number that the income tax authority issues to an entity after he/she completes the registration process. This number needs to be quoted by the reporting entity while submitting financial transactions.
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