ALL ABOUT STATEMENT OF FINANCIAL TRANSACTION

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Section 285BA—Statement of Financial Transactions (SFT)

The Statement of Financial Transactions (SFT) is a document or report that provides a comprehensive overview of an entity’s financial transactions over a specific period. It is a critical component of financial reporting and is typically prepared by businesses, organizations, and government agencies to accurately depict their financial activities and position.

Section 285BA requires specified persons to report high‑value financial transactions or registered financial activities to the Income Tax Department. The objective is to strengthen the Annual Information Statement (AIS) and ensure better tax compliance. Entities covered include banks (including co‑operative banks), post offices, companies issuing shares or debentures, NBFCs, registrars/sub-registrars, Mutual fund houses and Any other persons notified. The section ensures that transactions reflecting potential taxable events are captured through an institutional reporting mechanism.

Rule 114E—SFT Reporting Framework

Income-tax Rules, 1962 : Rule 114E prescribes Which transactions must be reported, threshold limits, reporting format (Form 61A), and due date of filing (generally 31 May following the financial year). Following are reportable transactions under SFT—key thresholds. Below is a thematic summary of major SFT categories and limits:

Cash Transactions with Banks

A. Cash Deposits/Withdrawals

Account Type	Threshold
Current Accounts	Cash deposits or withdrawals exceeding INR 50 lakh in a FY
Savings Accounts	Cash deposits exceeding INR 10 lakh in a FY

Co‑operative banks are fully covered.

Fixed Deposits

Reporting is required where a person invests INR 10 lakh or more in one or more term deposits (other than renewals).
Includes deposits with banks, post offices, and co‑operative banks.

Immovable Property Transactions

Purchase or sale of immovable property valued at ₹30 lakh or more must be reported.
Reporting responsibility lies with the Registrar/Sub‑Registrar, irrespective of stamp duty value disputes.

Credit Card Payments

Mode of Payment	Threshold
Total annual payments	More than INR 10 lakh
Cash payments	More than INR 2 lakh

All banks and credit card issuers are required to file SFT for these cases.

Securities and Mutual Fund Investments

Reporting is required when a person acquires shares, debentures, or bonds or invests in mutual fund units amounting to ₹10 lakh or more in a financial year. This ensures visibility of large capital market investments. Reporting entities the indicative list includes banks (public, private, and co‑operative), post offices, companies issuing securities, NBFCs, mutual fund houses, sub‑registrars, and credit card issuing institutions. These institutions collectively provide financial footprints of taxpayers, enabling a complete AIS profile.

Purpose of SFT Reporting

The SFT mechanism supports detection of undisclosed income, high‑value transaction tracking, cross-verification of AIS/TIS entries, and better risk evaluation for compliance enforcement. It is an integral part of the government’s financial transparency and anti‑evasion ecosystem.

IS THE FILING OF A NIL STATEMENT OF FINANCIAL TRANSACTIONS COMPULSORY?

In case there is no reportable transaction, no statement of financial transactions (i.e., Form No. 61A) is required to be filed. The Tax Dept Reporting Entity Identification Number (ITDREIN) is compulsory only if there are any reportable transactions. No Tax Dept Reporting Entity Identification Number is needed if there is no transaction.
A new simple functionality titled “Statement of Financial Transactions Preliminary Response” has been provided at the e-Filing portal for the reporting persons to indicate that a prescribed transaction type is not reportable for the FY.
It is advisable to file a “statement of financial transactions preliminary response” even if there is no reportable transaction.
CBDT has issued a press release dated 26/05/2017 aptly clarifying that registration of the reporting person (ITDREIN registration) is Compulsory only when at least one of the transaction types is reportable & not otherwise.

PARTS OF FORM 61A

SFT Filling Date Due Date:

The statement of financial transactions shall electronically be submitted in relation to an FY by the reporting entity with a DSC of the person responsible for verifying the declaration in Form No. 61A. The statement of financial transactions shall be submitted instantly after the FY in which the transaction is registered or registered on or before 31 May.

Failure to furnish SFT

In case of non-furnishing of the statement of financial transactions within the due date, Total, a penalty of Rs 500/- per day from the expiry of the original due date till the due date mentioned in the notice and Rs 1,000 per day beyond the due date specified in the notice. (Reference from Section 271FA of the Act)

The penalty of Rs 50,000 will be levied on the prescribed reporting financial institution if it provides inaccurate information in the statement where:

The person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to inform and furnish correct information within 10 days. Or
the person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable account, but does not inform the specified Tax authority or any other authority or agency; or
inaccuracy is due to a failure to comply with specified due diligence needed or is deliberate on the part of that person; or {as per provision of section 271FAA of Income Tax Act,}

In summary, the Statement of Financial Transactions serves as a vital tool for communicating an entity’s financial performance, position, and cash flows to stakeholders, facilitating informed decision-making and ensuring accountability and transparency in financial reporting. We look forward to your valuable comment.

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