All you need to know about SFT Compliance.
Introduction
As per section 285BA of the Income-tax Act, 1961, specified entities are required to furnish a Statement of Financial Transaction (SFT) or Reportable Account (hereinafter referred to as ‘statement’) in respect of specified financial transactions or any reportable account registered/recorded/maintained by them during the financial year to the income-tax authority or such other prescribed authority.
Applicability
Following persons shall be required to furnish statement of financial transactions or reportable accounts registered or recorded or maintained by them during a financial year to the prescribed authority:
(a) an assessee;
(b) the prescribed person in the case of an office of Government;
(c) a local authority or other public body or association;
(d) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908);
(e) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988);
(f) the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898);
(g) the Collector referred to in clause (g) of section 3 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013);
(h) the recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(i) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934)
(j) a depository referred to in clause (e) of sub-section (1) of section 2of the Depositories Act, 1996 (22 of 1996); or
(k) a prescribed reporting financial institutions
(l) a person, other than those referred to in clause (a) to (k), as may be prescribed.
Monetary Limit
| Sl. No. | Nature and value of transaction | Class of person (reporting person) |
| 1 | (a) Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to Rs. 10 lakh or more in a financial year. (b) Payments made in cash aggregating to Rs. 10 lakh or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India. (c) Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to Rs. 50 lakh or more in a financial year, in or from one or more current account of a person. | A banking company or a co-operative bank |
| 2 | Cash deposits aggregating to Rs. 10 Lakh or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person. | (i) A banking company or a co-operative bank (ii) Post Master General |
| 3 | One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to Rs. 10 lakh or more in a financial year of a person. | (i) A banking company or a co-operative bank (ii) Post Master General (iii) Nidhi Company (iv) Non-banking financial company |
| 4 | Payments made by any person of an amount aggregating to— (i) Rs. 1 lakh or more in cash; or (ii) Rs. 10 lakh or more by any other mode, against bills raised in respect of one or more credit cards issued to that person, in a financial year. | A banking company or a co-operative bank or any other company or institution issuing credit card. |
| 5 | Receipt from any person of an amount aggregating to Rs. 10 lakh or more in a financial year for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company). | A company or institution issuing bonds or debentures. |
| 6 | Receipt from any person of an amount aggregating to Rs. 10 lakh or more in a financial year for acquiring shares (including share application money) issued by the company. | A company issuing shares. |
| 7 | Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to Rs. 10 lakh or more in a financial year. | A company listed on a recognised stock exchange purchasing its own securities under section 68 of the Companies Act, 2013 |
| 8 | Receipt from any person of an amount aggregating to Rs. 10 lakh or more in a financial year for acquiring units of one or more schemes of a Mutual Fund (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund). | A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund |
| 9 | Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument of an amount aggregating to Rs. 10 lakh or more during a financial year. | Authorised person as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999). |
| 10 | Purchase or sale by any person of immovable property for an amount of Rs. 30 lakh or more or valued by the stamp valuation authority referred to in section 50C of the Act at Rs. 30 lakh or more. | Inspector-General or Registrar or Sub-Registrar appointed under the Registration Act, 1908 |
| 11 | Receipt of cash payment exceeding Rs. 2 lakh for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10 of this rule, if any.) | Any person who is liable for audit under section 44AB of the Act. |
| 12 | Cash deposits during the period 9th November, 2016 to 30th December, 2016 aggregating to— (i) Rs. 12,50,000 or more, in one or more current account of a person; or (ii) Rs. 2,50,000 or more, in one or more accounts (other than a current account) of a person. | (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 |
| 13 | Cash deposits during the period 1st of April, 2016 to 9th November, 2016 in respect of accounts that are reportable under SI.No.12 because cash deposited in this account between 9th November, 2016 to 30th December, 2016 aggregating to— (i) Rs. 12,50,000 or more, in one or more current account of a person; or (ii) Rs. 2,50,000 or more, in one or more accounts (other than a current account) of a person. | (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 |
Due Date
The statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in respect of a financial year in Form No. 61A on or before 31st May and shall be verified in the manner indicated therein.
Consequences of not filing (Penalty)
Non-furnishing of statement of financial transaction or reportable account will attract penalty under section 271FA. Penalty can be levied of Rs. 500 per day of default.
Further, section 285BA(5) empower the tax authorities to issue a notice to the person directing him to file the statement within a period not exceeding 30 days from the date of service of such notice and in such a case person shall furnish the statement within the time specified in the notice. If person fails to file the statement within the specified time, then a penalty of Rs. 1,000 per day will be levied from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.
Rectification of Defective Statement
If any person, after filing the statement, comes to know or discovers any inaccuracy in the information provided in the statement, he shall inform such inaccuracy to the prescribed income-tax authority within a period of ten days and furnish the correct information in such manner as may be prescribed.
On the other hand, the prescribed income-tax authority may also intimate the defect to the person and give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or within such extended period as may be allowed by prescribed income-tax authority.
However, if a person fails to rectify the defect within the said period than the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement.
Consequences for furnishing inaccurate/defective statement
If a prescribed reporting financial institution referred to in Section 285BA(1) who is required to furnish statement of financial transaction or reportable account, provides inaccurate information in the statement, and where:
(a) the inaccuracy is due to a failure to comply with the due diligence requirement prescribed under section 285BA(7) or is deliberate on the part of that person;
(b) the person knows of the inaccuracy at the time of furnishing the statement but does not inform the prescribed income-tax authority or such other authority or agency;
(c) the person discovers the inaccuracy after the statement is furnished and fails to inform and furnish correct information within a period of 10 days as specified under section 285BA(6),
then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees.
