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Form 61A: Statement of Specified Financial Transactions (SFT) Under Section 285BA of the Income Tax Act, 1961
The Income Tax Law has established the concept of the Statement of Specified Financial Transactions (SFTs) or reportable account to keep a record of the high-value transactions executed by the taxpayers. Using SFTs, the Income Tax Department will capture the information on certain high-value transactions as prescribed in the Section 285BA of the Income Tax Act, 1961.
This guide aims to provide a detailed explanation of Form 61A, covering all relevant aspects.
Contents :-
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Section 285BA
As per Section 285BA, read with Rule 114E, of the Income Tax Act, 1961, specified entities must provide details of Specified Financial Transactions (SFTs) or any reportable account registered/ recorded/ maintained by them during the financial year. The information is provided in Form 61A which contains various parts for capturing information related to SFT. All high-value transactions are captured through Form 61A enabling the Income Tax Department to keep a track of the same.
Transactions Required to be Reported under SFT
Section 285BA, read with Rule 114E, specifies the transactions that should be reported under Form 61A. The following transactions should be reported under SFT:
Class of Person | Nature and Type of Transaction | Aggregate Minimum Value of Transaction in a Financial Year |
|---|---|---|
Banking Company or Co-operative Bank or Postmaster General/ Non-Banking Financial Company (NBFC)/Nidhi Company | Cash deposits or cash withdrawals (which includes bearer’s cheque) aggregating to INR 50 Lakh or more in a financial year, in or from one or more current account of a person. | INR 50 Lakh |
"" | Purchase of bank drafts or pre-paid financial instruments. | INR 10 Lakh |
"" | One or more time deposits made by a person. | INR 10 Lakh |
"" | Cash deposit by a person (not including current accounts and time deposits). | INR 10 Lakh |
"" | Making the payment of a credit card. | INR 1 Lakh (in cash)
INR 10 Lakh (in any mode other than cash) |
A company or institution issuing Bond or Debenture or Shares | Receipt of share application money from any person of an amount for acquiring shares.
Receipt of money from any person for acquiring bonds or debentures. Other than the money received on account of renewal of bond or debenture. | INR 10 Lakh |
A company listed on a recognized Stock Exchange | Buying back shares from any person other than from the open market. | INR 10 Lakh |
A trustee of the mutual fund | Receipt from any person for acquiring units of one or more schemes of the mutual funds. | INR 10 Lakh |
Authorized person under the Foreign Exchange Management Act (FEMA) | Receipt from any person for sale of foreign currency. | INR 10 Lakh |
Registrar or Sub-Registrar or Inspector General appointed under the Registration Act, 1908 | Purchase or sale of immovable property, valued as per stamp valuation authority. | INR 10 Lakh |
Any person liable for audit under Section 44AB of the Income Tax Act, 1961 | Receipt of cash payment for sale of goods or services of any type, other than those mentioned above. | INR 2 Lakh |
Format of SFT
Form 61A is divided into different parts namely:
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Part A: It seeks statement related details and is common for all types of transactions. Information such as: Reporting entity details, statement details, and principal office details are required under this section.
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Part B: Report details for aggregated financial transactions. It is a person based reporting. Information such as: Report number, person details, financial transaction summary and financial transaction details are required under this section.
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Part C: Report details for bank or post office account. It is an account based reporting. Information such as: Report number, account details, account summary, and person details are required under this section.
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Part D: Report details for immovable property transactions. It is a transaction based reporting. Information such as: Report number, transaction details, and person details are required under this section.
Persons Required to File SFT
The following persons should file SFT or reportable accounts registered, recorded, or maintained by them during the reporting period:
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A financial institution being a banking company or a co-operative bank.
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A Non-Banking Financial Company (NBFC).
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An entity that issues the credit card.
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An individual or entity to whom the audit under Section 44AB of the Income Tax Act, 1961 is applicable.
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Postal Service Offices.
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A Company issuing shares.
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A Company issuing bonds or debentures.
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A Nidhi Company, defined under Section 406 of the Companies Act, 2013.
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A mutual fund company.
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A company listed on the recognised stock exchange.
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A mutual fund trustee or an authorized individual of the trustee.
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An inspector general or sub-registrar appointed under the Registration Act, 1908.
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Off-shore banking units, money changer, authorized dealer and others as defined in the Foreign Exchange Management Act, 1999.
Registration
Every reporting entity or individual must communicate with the Principal Director General of Income Tax, the name, address, designation, and mobile number of the Designated Director and Principal Officer and obtain a registration number. Designated Director is the person designated by the reporting person to look after the overall compliance of Section 285BA, read with, Rules 114B and 114E.
The reporting entity or individual must register with the Income Tax Department and obtain an Income Tax Department Reporting Entity Identification Number (ITDREIN). Once ITDREIN is generated, it cannot be deactivated. Following are the steps for obtaining registration for filing the SFT:
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Step 1: Login to the income tax website at https://incometaxindiaefiling.gov.in/ using the login credentials of the reporting entity or individual to file their Income Tax Return.
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Step 2: To access the reporting portal for the first time, click on the ‘My Account’ tab and then select the ‘Reporting Portal’ Link.
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Step 3: Enter the information such as: form type, details of the Principal Officer, category, address of the reporting entity or individual.
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Step 4: After successful submission of the details, an ITDREIN will be generated. The Principal Officer will receive an email confirmation at the registered email address and a message on the registered mobile number.
Steps to File SFT
SFT can be easily filed at the income tax portal by following the below steps:
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Step 1: Visit at https://report.insight.gov.in/reporting-webapp/portal/homePage and access the ‘Resources’ section. Download the Report Generation and Validation Utility Form 61A, and Generic Submission Utility.
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Following the preparation guidelines, generate the general and transaction specific SFT as per the prescribed format.
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Once the form is fully completed, sign the same using a digital signature and upload at the reporting portal using the login credentials of the designated director.
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Upon successful completion of the online submission, an acknowledgement number will be sent over the registered email id.
Due Date
The SFT must be digitally signed and submitted electronically in Form 61A to the Director of Income Tax (Intelligence and Criminal Investigation) or the Joint Director of Income Tax (Intelligence and Criminal Investigation). The due date of submitting SFTs is May 31, of the year following the previous year in which the transaction took place.
Failure to Furnish SFT on Time
Failure to furnish SFT within the due date will result in penal consequences under Section 271FA. The penalty for default can be INR 500 per day. Moreover, as per Section 285BA(5), the income tax officials have been designated with the power to issue notice to the person in default to file SFT within 30 days from the date of service of notice or within the time specified in the notice. Failure to do the same, will result in penal consequences of INR 1,000 per day from the date of expiry of period specified in the notice.
Inaccurate or Defective SFT
If any person learns or discovers an inaccuracy in the information provided in the SFT after filing it, he must notify the prescribed authority within 10 days of discovering such inaccuracy. He must provide accurate information thereby. Moreover, the income tax authority may notify the person, if there is a defect in the SFT filed by him and provide him the opportunity to correct the same within 30 days of such notification or within such extended period as the income tax authority may prescribe.
If the person fails to rectify the defect within a specified time period, the SFT will be considered as invalid and the provisions of this Act shall apply as if the person has failed to furnish the SFT. However, beginning September 1, 2019, if the person fails to rectify the defect in the SFT, it will be considered as a submission of inaccurate information in the SFT.
Consequence of Furnishing Inaccurate or Defective Information in SFT
As per Section 271FAA of the Income Tax Act, 1961, if the prescribed reporting financial institution referred under Section 285BA(1) which is required to file a SFT or reportable account, provides inaccurate information in SFT, and where:
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The inaccuracy is caused by the failure to comply with the due diligence requirements, or is deliberately made by that person;
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When the person is aware of the inaccuracy but fails to provide the information of the same to the appropriate authority or agency;
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When the inaccuracy is noticed after the SFT has been filed and the correct information is not provided within 10 days.
Then, the prescribed income tax authority may direct the person in default to pay a penalty of INR 50,000.
Moreover, beginning A.Y. 2023-2024, reporting financial institutions will face a penalty of INR 5,000 if there is an inaccuracy in the filing of SFT due to submission of false or inaccurate information by the account holder of the reportable accounts. The reporting financial institution may recover the penalty from the account holder of the reportable accounts.
Furnishing SFT by a Prescribed Reporting Financial Institution
Section 285BA also requires that the prescribed reporting financial institution should provide a SFT or reportable account to facilitate the effective exchange of information between the residents and non-residents. The statement for each calendar year must be filed in Form 61B by May 31, of the following year.
Frequently Asked Questions
Q
Explain Rule 114E
A
Rule 114E of the Income Tax Rules, 1962 specifies the format of Form 61A which is used for filing the Statement of Specified Financial Transactions (SFT) or reportable accounts as per Section 285BA(1).
Q
Is Form 61A mandatory to be filed?
A
Specified entities as per Section 285BA should file Form 61A in respect of specified financial transactions.
Q
Explain ITDREIN
A
Income Tax Department Reporting Entity Identification Number (ITDREIN) is an identification number assigned to the reporting entity by the Income Tax Department. Once the Department assigns ITDREIN, the authorized person is added to the generated ITDREIN, allowing them to submit a valid Form 61A.
Q
List the different parts of Form 61A.
A
Form 61A is divided into four parts namely:
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Part A: It is a statement based reporting and common to all reporting entities.
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Part B: It is a person based reporting.
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Part C: It seeks information of bank or post office accounts of the reporting entity.
Part D: It seeks information on specified financial transactions.
Q
What is the due date of furnishing SFT or reportable accounts?
A
The SFT must be submitted on or before May 31, immediately following the financial year in which the transaction took place.
Q
Name of the Designated Director in each of the following types of reporting person:
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Company
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Partnership Firm
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Proprietorship Concern
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Trust
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AOP, BOI, or any other person
A
The Designated Director must sign, verify, and submit the financial transactions statement. The following types of person is the Designated Director for each type of reporting entity:
Reporting Entity | Designated Director |
|---|---|
Company | Managing Director or Whole-Time Director authorized by the Board of Directors. |
Partnership Firm | Managing Partner |
Proprietorship Concern | Proprietor |
Trust | Managing Trustee |
AOP, BOI, or any other person | A person or individual in charge of the affairs of the reporting entity. |
Q
What is the mode through which SFT can be furnished and to whom?
A
A digitally signed SFT must be submitted electronically in Form 61A to the Joint Director of Income Tax (Intelligence and Criminal Investigation) or the Director of the Income Tax (Intelligence and Criminal Investigation). Moreover, a Postmaster General, or Registrar, or Inspector General, on the other hand may submit Form 61A on a computer-readable medium such as a Compact Disc or Digital Video Disc (DVD), also providing verification on paper in Form-V.
Q
If a person has not furnished SFT within the specified due date, what is remedy available to the Tax Authority?
A
Section 285BA(5) allows the tax authorities to issue notice to persons who have failed to furnish the SFT within the specified time period. The tax authority may serve a notice requiring the person to furnish the SFT within 30 days from the date of service of notice. The person is bound to furnish the SFT in response to such notice.
Q
What is the remedial action available if the person has filed inaccurate or defective SFT?
A
If a person discovers that the information submitted in Form 61A is inaccurate after filing the same, he must notify the income tax authority within 10 days of such discovery. Moreover, he must provide the correct information as well.
If the income tax authority has discovered the inaccurate information in Form 61A, the same must be communicated to the person by giving an opportunity to rectify the defect within 30 days from the date of intimidation of such defect.
Moreover, if the person fails to provide rectification to the defect within the specified time period, the provisions of the Act will apply as if the person has furnished incorrect information in the SFT.
Q
What is the penalty for not filing SFT within the time specified in the notice?
A
Section 285(5) allows the tax authorities to issue a notice to the person in default for filing the SFT, directing them to furnish the SFT within 30 days from the date of service of notice. Thereby, the person must file the SFT within the time specified in the notice. If the person fails to do so, a penalty of INR 1,000 per day will be imposed beginning the day following the day on which the time specified in the notice to furnish the SFT expires.
Prachi Jain
Chartered Accountant
Prachi Jain is a Chartered Accountant with a passion for simplifying finance and tax-related matters through her insightful and informative blogs. With a background in finance and a deep understanding of tax regulations, Prachi has established herself as a trusted source of financial wisdom. Prachi is committed to empowering her readers with the knowledge they need to make informed financial decisions. Her expertise and dedication shine through in every blog post, helping her audience navigate the intricacies of finance and taxes with confidence. Follow Prachi Jain's blog for practical insights and guidance on managing your finances effectively.
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