SFT- Statement of Financial Transaction

What is Statement of Financial Transaction?
Statement of Financial Transactions (SFT), formerly known as Annual Information Report (FIR) are list of specified transactions marked by the Income Tax Department to keep a watch on high value transactions undertaken by the taxpayer, as reportable under Section 285BA[simple_tooltip content=’1.obligation to furnish statement of financial transaction or reportable account’]ยน[/simple_tooltip] of Income Tax Act, 1961
What transactions are to be reported?

The transactions that are to be reported under the Section are as follows:

  • Transaction of purchase, sale/ exchange of goods or property or right or interest in a
    property; or
  • transaction for rendering any service; or
  • transaction under a works contract; or
  • transaction by way of an investment made or an expenditure incurred; or
  • transaction for taking or accepting any loan or deposit.
What is the nature & value of transactions and Who are the Reporting Persons?
The Central Board of Direct Taxes (CBDT) is authorized to prescribe values with respect to different specified financial transactions in respect of different specified persons having regard to such nature of transactions. Rule 114E of Income Tax Rules, 1962 covers the same as prescribed by CBDT.

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Aggregation rule needs to be applied for specified transaction types to identify transactions/persons/accounts which are reportable. The aggregation rule is applicable for all transaction types except SFT- 012 (Purchase or sale of immovable property) and SFT- 013 (Cash payment for goods and services).
What is the time limit to furnish SFT?
The Statement of Financial Transaction shall be furnished on or before 31st of May, immediately following the financial year during which the transaction is recorded. The tax authorities are also vested with powers to furnish a notice to a person who is required to furnish such statement but has failed to within prescribed time limit requiring such person to furnish such statement not exceeding 30 days from the service of notice.
Which form to furnish?

Reporting entities are to furnish SFT under Form 61A.

https://applylegal.com/itform61anew.pdf

What are the consequences of not furnishing SFT?
The person who fails to furnish such statement can be imposed with a penalty under Section 271FA[simple_tooltip content=’6. Penalty for failure to furnish statement of financial transaction or repotable account.
‘]6[/simple_tooltip] of the Act at the rate of one hundred rupees for everyday till such a failure continues. In case of a failure to furnish statement after the prescribed time limit of the notice to furnish SFT, the failure would attract a penalty of five hundred rupees for everyday for which the failure continues.

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