Kind Attention SFT filers! The last date for filing the Statement of Financial Transactions (SFT) for F.Y. 2023-24 is May 31st, 2024.
SFT is required to be filed in Form No. 61A for transactions entered with third parties. Do ensure timely submission of your SFT!
SFT – Statement Of Financial Transaction
The presence of undisclosed wealth, or “black money,” represents a significant threat to the Indian economy. Consequently, the Indian government has implemented various measures to address this issue. One such measure, introduced in 2003 as the ‘Annual Information Return (AIR)’ under Section 285BA of the Income Tax Act, was later modified by the Finance Act of 2014 and renamed as the ‘duty to produce a statement of financial transaction or reportable account.’
Understanding the Statement of Financial Transaction (SFT)
Taxpayers are required to furnish a statement of financial transaction or reportable account for their specified financial activities. The information reported is then included in the Annual Information Statement (AIS) provided to the taxpayer. This allows individuals to review all transactions reported to the income tax department and accurately file their Income Tax Return (ITR).
This process enables the tax department to monitor transactions and deter illicit activities.
Types of Transactions Mandated for Reporting
The financial transactions that must be reported under Section 285BA include:
- Purchase, sale, or exchange of goods, property, or rights/interests in property
- Provision of services
- Transactions related to works contracts
- Investments made or expenses incurred
- Acquisition or acceptance of loans or deposits
Nature, Value and Person Responsible to Report a Specified Transaction
Section 285BA authorises the Central Board of Direct Taxes (CBDT) to prescribe different values with respect to different specified financial transactions in respect of different specified persons having regard to the nature of such transactions.
The same prescribed by CBDT via Rule 114E is given below:
| SI. No | Nature of transaction to be reported | Monetary threshold of transaction | Specified person required to submit SFT |
| 1 | Cash payment purchase of bank drafts or pay orders or banker’s cheque, | Aggregating to Rs.10 lakh or more in an FY | A banking company or co-operative bank to which the banking regulation applies. |
| Cash payments for the purchase of pre-paid instruments issued by the Reserve Bank of India, | Aggregating to Rs.10 lakh or more during the FY, | ||
| Cash deposits or withdrawals from one or more current accounts of a person | Aggregating to Rs.50 lakh or more in an FY | ||
| 2 | Cash deposits in one or more accounts other than a current account and time deposit of a person | Aggregating to Rs.10 lakh or more in an FY | A banking company or co-operative bank to which the banking regulation applies,Post-Master General of a post office |
| 3 | One or more time deposits (other than renewed time deposit of another time deposit) of a person | Aggregating to Rs.10 lakh or more in an FY | A banking company or co-operative bank to which the banking regulation applies,Post-Master General of a post office, Nidhi Company as per Section 406 of the Companies Act, 2013, NBFC – Non-banking financial company holding a certificate of registration under RBI Act to hold or accept deposit from public |
| 4 | Credit card payments made by any person either in cash or by any other mode in a FY. | Aggregating to Rs.1 lakh or more in cash OR Rs.10 lakh or more by any other mode in an FY | A banking company or Co-operative bank to which Banking Regulation applies or any other company or institution issuing credit card |
| 5 | Receipt from any person for acquiring bonds or debentures issued by the company or institution (other than renewal) | Aggregating to Rs.10 lakh or more in an FY | A company or institution issuing bonds or debentures. |
| 6 | Receipt from any person for acquiring shares (including share application money) issued by the company | Aggregating to Rs.10 lakh or more in an FY | A company issuing shares |
| 7 | Buyback of shares from any person (other than the shares bought in the open market) | Aggregating to Rs.10 lakh or more in an FY | Listed company purchasing its own securities under Section 68 of the Companies Act, 2013 |
| 8 | Receipt from any person for acquiring units of one or more schemes of a mutual fund (other than transfer from one scheme to another) | Aggregating to Rs.10 lakh or more in an FY | A trustee of a mutual fund or any such other person authorised to manage the affairs of the mutual fund |
| 9 | Receipt from any person for sale of foreign currency including any credit of such currency to a foreign exchange card or expense in such currency through a debit or credit card or through the issue of travellers cheque or draft or any other instrument | Aggregating to Rs.10 lakh or more during an FY | Authorised person as referred to in Section 2(c) of the Foreign Exchange Management Act, 1999 |
| 10 | Purchase or sale of immovable property | Transaction value or valuation of stamp duty authority referred in Section 50C for an amount of Rs.30 lakh or more. | Inspector-General appointed under Section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act. |
| 11 | Cash receipt for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10) | Exceeding Rs.2 lakh | Any person who is liable for audit under section 44AB of the Act |
Aggregation Rule
As can be seen from the above monetary threshold for specified financial transactions except SI. No 10 and 11, aggregation is required to analyse if the monetary threshold is being crossed.
While aggregating the amount, the following shall be noted:
1. All the accounts of the same nature as specified in column (2) of the above table maintained in respect of that person during the FY shall be taken into account.
For example: If Mr. A has two savings accounts of Rs. 5 lakh each, in order to check the monetary threshold of Rs. 10 lakh, the amount in both savings accounts needs to be aggregated.
2. All the transactions of the same nature as specified in column (2) of the above Table recorded in respect of that person during the FY shall be aggregated.
For example: If Mr. A has purchased shares for a value of Rs. 5 lakh in September in an FY and Rs. 6 lakh in November of the same FY, the value of both shares needs to be aggregated to check the monetary threshold of Rs. 10 lakh.
3. In a case where the account is maintained, or the transaction is recorded in the name of more than one person, like a joint account, attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons.
For example: In case Mr. A and Mr. B hold two joint savings accounts of Rs. 3 lakh and Rs. 7 lakh, an aggregation of Rs. 10 lakh is attributed to both Mr. A and Mr. B separately to check for monetary threshold.
Frequently Asked Questions
Who is required to Submit SFT statement?
SFT must be submitted by a Financial Institution, Depository, Mutual funds house, Company, etc, on the transaction made by their account holders. On submission of such a statement, the data will be reflected in the AIS of the taxpayers.
Do I need to report SFT transactions on my tax return?
SFT details will be reflected in your Form AIS, SFT transactions can be both at the Income / Sale side ( SB Interest, Sale of Stock / MF ) or from the Expense / Purchase side (Purchase of stocks / MF / Immovable property etc).
Transaction from the sale side might be important since it is required to be disclosed in your ITR form and will be relevant to tax calculation. Transactions from the Expense / Purchase side might not directly impact your tax filing. However, any significant deviation between the Expenses and the Income might attract an Income tax notice.
What is the due date for filing SFT?
The due date for filing SFT by the specified taxpayer is 31st May of the succeeding financial year. I.e for FY 2023-24, 31st May 2024 is the last date.
What is SFT information in AIS?
SFT—Statement of Financial Transactions are specified or reportable financial transactions that took place during the financial year, such as the Purchase of Mutual funds, Stocks, Cash Deposits exceeding Rs 10 lakhs, etc. Banks and other financial intermediaries will report such specified transactions to the income tax department, which will further be reflected in the respective taxpayer’s AIS.
How do I download SFT from the income tax portal?
Details of SFT are available in your income tax portal. Once you log in to the income tax portal, go to AIS in the dashboard. Here, under SFT Information, all such details will be reflected.