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Form 61A: Statement of Specified Financial Transaction (SFT)

by | May 27, 2024 | Income Tax | 0 comments

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Form 61A: Statement of Specified Financial Transaction (SFT)

Form 61A is an important financial report that banks and other financial institutions need to submit under section 285BA of the Income-tax Act, 1961. This form gathers details about large transactions made by individuals, including cash deposits and withdrawals, property purchases, and other significant financial activities. Tax authorities use the information from Form 61A to study taxpayer behavior, spot possible tax evasion, and ensure everyone follows the tax laws. This helps make the tax system more efficient and effective in catching and preventing tax-related issues.

What is Section 285BA?

As per Section 285BA and Rule 114E of the Income Tax Act of 1961, specific entities are required to report details of Specified Financial Transactions (SFTs) or any reportable accounts they manage during the fiscal year. This information is submitted using Form 61A, which has various sections designed to collect SFT-related data comprehensively. Form 61A is a vital tool that helps the Income Tax Department monitor significant financial activities effectively.

Specified Financial Transactions (SFT) include:
  • Accepting deposits and taking loans
  • Works contracts
  • Sale, purchase, or exchange of goods, rights, property, or interest in certain properties
  • Providing services
  • Making investments or incurring expenditures

Who should file Form 61A?

The following entities are responsible for filing Form 61A:

  • Non-Banking Financial Companies (NBFCs)
  • Financial institutions such as banking companies or co-operative banks
  • Mutual fund companies
  • Institutions issuing credit cards
  • Individuals or entities covered under audit as per Section 44AB
  • Post offices
  • Nidhi companies (under Section 406 of the Companies Act 2013)
  • Companies issuing shares, bonds, and debentures
  • Companies listed on recognized stock exchanges
  • Mutual fund trustees or their authorized representatives
  • Inspectors general or sub-registrars appointed under the Registration Act, 1908
  • Offshore banking units, authorized dealers, money changers, or any other specified persons mentioned in FEMA

Form 61A ensures that all significant financial transactions are recorded and reported to help the Income Tax Department keep a close check on such activities, promoting better compliance and transparency in financial dealings.

Transaction to be reported

Specified PersonNature of TransactionMinimum transaction amount limit (INR)
Banking companies and Co-operative BanksDeposits or withdrawals in a financial year from one or more current accounts50 Lakhs
Banking companies and Co-operative BanksCash Payouts for demand drafts, purchase orders, or purchase of RBI investment instruments like RBI bonds.10 Lakhs
Banking companies, Co-operative Banks, and Post officesDeposits in a financial year in any bank account other than a current account and time deposit10 Lakhs
Banking companies, Co-operative Banks, Post offices, and Nidhi companyPayments made against the bill of credit cards issued to a customer in a yearPayments made in:
Cash – 1 Lakhs
Others – 10 lakhs
A company issuing bonds and debenturesReceipts in a financial year from individuals for purchasing bonds and debentures10 Lakhs
A company issuing sharesReceipts in a financial year from individuals for purchasing shares including share application money received10 Lakhs
Listed companiesBuy-back of shares10 Lakhs
Manager/Trustee of Mutual fundsReceipts from individuals purchasing units of mutual funds in a financial year10 Lakhs
Dealer of Foreign exchangeReceipts from sales of foreign currencies or expenses incurred in the said currencies through credit card/debit card or through the issuance of travelers’ cheques, draft, or other financial instruments10 Lakhs
Inspector general or sub-registrar registered under the Registration Act, 1908Sale or purchase of immovable properties30 Lakhs
Person liable for audit u/s 44AB of the Income Tax ActCash receipts for the sale of goods or rendering services2 Lakhs

Due date and Penalties for Form 61A

The statement of Specified Financial Transactions (SFT) must be submitted by 31st May of the following year for every financial year in which the transactions occurred. If a specified person fails to file the statement within this deadline, tax authorities will issue a notice under section 285BA(5), giving them 30 days from the date of receiving the notice to submit Form 61A. Failure to comply within this period results in a penalty of INR 500 per day from the date specified in the notice.

If there is no response to the notice, a heavier penalty of INR 1000 per day will be imposed from the expiry date mentioned in the notice.

Inaccurate or Defective Form 61A

If inaccuracies are found in the submitted Form 61A, the specified person must notify the prescribed authority within 10 days of discovering the error by providing the correct information. If the authority detects inaccuracies, they will notify the specified person, who then has 30 days (or an extended period granted by the authority) to correct the information. Failure to rectify the inaccuracies within the specified time renders the form invalid, treating it as though the form was never filed. From 1st September 2019, any failure to correct the defects will be considered as submitting defective or inaccurate information.

Consequences of Defective or Inaccurate Form 61A

Under section 271FAA of the Income Tax Act, 1961, a penalty of INR 50,000 may be imposed if:

  • The inaccuracy arises from non-compliance with due diligence requirements or is intentional.
  • The individual knew about the inaccuracy but failed to report it to the relevant authority or agency.
  • The discrepancy is found after filing the SFT, and the accurate information is not provided within 10 days.

Additionally, starting from Assessment Year (AY) 2023-2024, financial institutions will incur a penalty of INR 5,000 for inaccuracies due to incorrect information provided by account holders of reportable accounts. The financial institution can recover this penalty from the respective account holder.

Steps to File Form 61A (SFT)

  1. Register on the Reporting Portal:
    • Log in to the Reporting Portal through the “My Account” menu.
  2. Prepare the XML File:
    • Ensure that all statements to be uploaded conform to the XML format and the prescribed schema published by the Income Tax Department.
  3. Sign and Encrypt the XML File:
    • Use the Submission Utility to sign and encrypt the generated XML file.
  4. Package the XML File:
    • Prepare a package containing the signed and encrypted XML file, making it ready for uploading.
  5. Submit the Statement:
    • Upload the packaged file to the Reporting Portal.
  6. Acknowledgment:
    • Upon successful submission, you will receive an email with an “Acknowledgment Number” sent to your registered email ID.

Parts of Form 61A

Form 61A is divided into two main parts:

  • Part A:
    • Contains statement-level information common to all transaction types.
  • Part B:
    • Reporting of aggregated financial transactions by the person.
  • Part C:
    • Reporting of bank accounts.
  • Part D:
    • Reporting of immovable property transactions.

Read More: ITR Documents Checklist: House Property Income

Web Stories: ITR Documents Checklist: House Property Income

Official Income Tax Return filing website: https://incometaxindia.gov.in/

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