Overview of Statement of Financial Transactions (SFT)
Form 61A, mandated under Rule 114E of the Income Tax Rules, serves as the Statement of Financial Transactions (SFT). It is a structured reporting tool used by specified entities to disclose high-value financial transactions. This system enhances transparency, helps track potential tax liabilities, and ensures compliance with income tax regulations.
SFT reporting applies to transactions exceeding prescribed thresholds and covers a wide range of financial activities, including foreign and domestic transactions. It enables the Income Tax Department to monitor financial flows and detect possible tax avoidance
SFT for Interest Income
The SFT also includes the reporting of interest income, which encompasses:
Earnings from savings accounts, fixed deposits, bonds, and certificates of deposit (CDs)
Reported on an accrual basis—recorded when earned, not when received
Classified under operating or non-operating income depending on the organization’s core activities
A vital part of an entity’s revenue and profitability assessment
Entities such as banks, NBFCs, and post offices must report interest payments aggregating ₹5,000 or more per person per year, ensuring transparency in taxpayer income declarations.
Prescribed Date for Submission of SFT
The due date for submitting the Statement of Financial Transactions (SFT) is typically on or before May 31 of the assessment year following the financial year in which the specified transactions occur.
However, certain transactions may have different deadlines as determined by the tax authorities.
Submission is generally done electronically through the designated portal or platform.
Extensions may be granted in certain cases, but these are subject to conditions and approvals by the authorities.
Late submissions can incur penalties or fines, making it crucial to adhere to the prescribed deadlines.
Eligibility to Furnish SFT for Interest Income
Eligibility applies when the aggregate interest income exceeds the threshold set by the tax authorities during a financial year.
Entities required to report include banks, financial institutions, businesses, and individuals involved in financial activities meeting the criteria specified by tax authorities.
Interest income to be reported includes earnings from sources such as savings accounts, fixed deposits, bonds, and other interest-bearing instruments.
Compliance with SFT filing is mandated by tax authorities in the applicable jurisdiction.
Some entities or categories may be exempt from reporting based on specific regulations or income thresholds established by the authorities
New Registration of Statement of Financial Transactions (SFT)
Step 1: Access Portal
Log in to the designated government portal for filing the Statement of Financial Transactions.
Step 2: Select Statement Type
Choose the relevant statement type (e.g., Form 61A for specified transactions).
Step 3: Enter Details
Accurately input the transaction details, including PAN/TAN of the parties involved, transaction amount, nature of the transaction, and date.
Step 4: Verify Information
Double-check the entered information to ensure precision and correctness.
Step 5: Upload Documents
If necessary, attach supporting documents in the required formats as per the guidelines.
Step 6: Review and Submit
Review all details before submission to confirm accuracy.
Step 7: Confirmation and Acknowledgment
Wait for confirmation or acknowledgment of successful submission.
Step 8: Record Transaction ID
Note down the transaction ID or reference number for future tracking
Guidelines for Preparation of Statement of Financial Transactions
Gather necessary details such as PAN/TAN, transaction date, amount, and nature of the transaction.
Ensure all supporting documents are in the required format and readily available for upload.
Categorize transactions accurately based on the specified guidelines for various SFT types.
Verify data for accuracy before submission to avoid discrepancies.
Adhere to deadlines to avoid penalties or legal issues.
Use the designated portal effectively for SFT filing.
Safeguard sensitive information while compiling and submitting the statement.
Review the statement before final submission to ensure compliance with regulatory norms.
Aggregation Rule for Statement of Financial Transactions
Aggregate transactions that meet specified thresholds, typically for PAN or TAN holders.
Combine similar transactions that fall under the same category or nature.
Aggregate transactions across multiple entities associated with the same PAN or TAN.
Combine transactions within a specific period (usually a financial year) for reporting purposes.
Merge transactions from related entities or individuals, such as joint accounts or partnerships.
Exclude specific transactions based on predefined exceptions as stated in regulatory guidelines.
Ensure accurate aggregation and summation of transactions according to established norms
Due Date for Furnishing Statement of Financial Transactions
The SFT must be submitted by May 31 of the succeeding year following the financial year in which the transactions occurred.
Penalties for missing the deadline:
₹500 per day for late submission until a notice is issued by authorities.
After the notice is issued, the SFT must be filed within 30 days, and failure to do so will result in a ₹1000 per day penalty
Procedure for Submission of Statement of Financial Transactions
Step 1: Gather Financial Transaction Details
Collect all relevant transaction details for the financial year.
Step 2: Log in to the Portal
Access the designated portal for filing the SFT.
Step 3: Select Form
Choose the appropriate form for the Statement of Financial Transactions.
Step 4: Fill in Transaction Details
Accurately input all transaction specifics.
Step 5: Review Data
Ensure all entered information is correct by reviewing it thoroughly.
Step 6: Upload/Submit the Form
Upload or input the finalized form for submission.
Step 7: Confirmation
Wait for confirmation of successful submission.
Step 8: Record Acknowledgment
Save the acknowledgment or reference number for future tracking.
Step 9: Compliance
Ensure you comply with the due date and all regulatory requirements.
Step 10: Address Notices
If you receive any notices or queries from authorities, address them promptly
Frequently Asked Questions (FAQs)
1. Who is required to file SFT?
Banks, financial institutions, and other specified entities that engage in high-value transactions are required to submit the Statement of Financial Transactions (SFT) to the Income Tax Department, as mandated by the Income Tax Act.
2. What are the four key types of financial transactions covered under SFT?
The primary categories of reportable financial transactions include:
Large cash deposits
Purchase or sale of immovable property
High-value credit card payments
Investments in mutual funds exceeding prescribed thresholds
3. What are the penalties for failing to file SFT?
Late or non-filing of SFT can attract a penalty of ₹500 per day for the initial default. If the delay continues after a notice is issued, the penalty increases to ₹1,000 per day.
4. What is the threshold for reporting interest income under SFT?
Interest income of ₹10,000 or more in a financial year must be reported under SFT by banks and other reporting entities.
5. Who must file SFT Form 61A?
Form 61A must be filed by banks, post offices, financial institutions, and other specified persons involved in high-value transactions, as required under Rule 114E of the Income Tax Rules.
