What is statement of financial transaction
What is statement of financial transactions.
Statement of financial transactions means the Income Tax Act has defined financial transactions as reportable account details to maintain track of high value transactions carried out by the taxpayer. With the help of data of transactions done by a person throughout the year. Financial transaction information or reportable account information must be filed by specific predetermined entities.
As we are aware
The Indian economy is seriously threatened by the growth of black money. The Indian government has therefore started a variety of initiatives to stop such behaviors. Under Section 285BA of the Income Tax Act, the "Annual Information Return (AIR)" was introduced in 2003. The Finance Act of 2014 dubbed it "duty to produce a statement of financial transaction or reportable account" and later repealed it.
STATEMENT OF FINANCIAL TRANSACTIONS RELATED PROVISIONS:-
According to section 285BA of the Income Tax Act, 1961, specified entities are required to
furnish a statement of financial transaction or reportable account (hereinafter referred to as
‘statement’) in respect of specified financial transactions/any reportable account
registered/recorded/maintained by them during the Accounting year to the income-tax authority or
such other prescribed authority.
Given below are some of the transactions that need to be reported.
The following financial transactions are specifically listed as Section 285BA mandated disclosures:
- Transaction on purchase, sale/exchange of goods or property or right or interest in a property
- Transaction of rendering any service
- Transaction under works contract
- Transaction by way of investment made or expenditure incurred
- Transaction for taking/accepting any loan or deposit
Some information about the type, amount, and person who must record a certain transaction.
| Type of transaction that should be reported | Type of transaction that should be reported | Person required to submit SFT. |
| Purchasing bank draughts, pay orders, or banker's checks with cash, purchasing pre-paid instruments issued by the Reserve Bank of India with cash Cash deposits into a person's current accounts, withdrawals of money from a person's current accounts | totaling at least Rs. 10 lakh every fiscal year, totaling at least Rs. 10 lakh each fiscal year, Adding up to at least Rs. 50 lakh in a fiscal year, totaling Rs. 50 lakh or more in a fiscal year | A financial institution covered by the banking regulation, such as a bank or cooperative |
| Deposits of money into one or more accounts, excluding a person's current account and time deposit | totaling at least Rs. 10 lakh every fiscal year | Postmaster General of a post office, a banking firm or cooperative bank to whom the banking regulation applies |
| A person's one or more time deposits, excluding renewed time deposits of other time deposits | totaling at least Rs. 10 lakh every fiscal year | Postmaster General of a post office, Nidhi Company in accordance with Section 406 of the Companies Act of 2013, NBFC - Non-Banking Financial Company holding a certificate of registration under RBI Act to hold or accept deposits from the public, and any banking company or cooperative bank to which the banking regulation applies |
| Any person who uses a credit card throughout a fiscal year may pay with cash or through another method. | adding up to at least Rs 1 lakh in cash or at least Rs 10 lakh using another method within a fiscal year | Any business or entity offering credit cards, whether it be a banking organisation or cooperative bank to whom the Banking Regulations apply. |
| receipt (other than renewal) from a third party for purchasing bonds or debentures issued by the company or organisation | totaling at least Rs. 10 lakh every fiscal year | a business or organisation that issues bonds or debentures |
Deadline for submitting SFT (Due date)
SFT in Form 61A must be turned in on or before May 31 of the fiscal year (FY) that comes just after the one in which the transaction is recorded or registered.
The required reporting financial institution must submit the Statement of Reportable Account in Form 61B on or before May 31 of the following year for each calendar year.
Special provisions for penalties where a financial institution is required to report.
Inaccuracy is caused by a failure to follow the prescribed due diligence requirement or is deliberate on the part of that person; or The person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable account, but does not notify the prescribed income-tax authority or such other entity, in which case the prescribed reporting financial institution will be subject to a fine of Rs 50,000.
