​​Statement of Financial Transaction (SFT)

For the purposes of pre-filling the return of income, a statement of financial transaction in respect of dividends, including deemed dividends, is required to be filed by a Company.

How to file SFT?

The reporting entity shall be required to report information about the total amount of dividend distributed to any person during the financial year. The information about divided income is required to be uploaded in a data file and one report would include details of dividend payment to one person. Reporting entities are required to prepare the data file in the prescribed format from their internal system. An excel based report preparation utility has also been provided to assist small reporting entities in preparing data files.

Further, reporting entities are also required to provide information on dividends, reported to Income Tax Department, to the taxpayers which will enable them to reconcile the information displayed in the Annual Information Statement (AIS).

Due date to furnish SFT

In respect of dividends, SFT shall be furnished on or before the 31st May of the financial year immediately following the financial year in which the transaction is registered or recorded.

For the purposes of pre-filling the return of income, a statement of financial transaction in respect of interest is required to be filed by the following persons:

 a) A Banking company or a Co-operative Bank;

 b) Post Master General;

 c) NBFCs

Guidelines to report interest payments in SFT

The following guidelines has been issued for furnishing of SFT in respect of interest income:

 a) The reporting of information is required for each account or deposit regardless of the amount of interest credited during the financial year. However, Jan Dhan Accounts are excluded from this reporting requirement;

 b) Interest which is exempt from tax under the Income-tax Act, 1961, such as interest on Public Provident Fund (PPF) Account, Foreign Currency Nonresident (FCNR) Account, SukanyaSamriddhi Account, Resident Foreign Currency Account, etc., need not be reported;

 c) While reporting the interest amount, a deduction of Rs. 10,000 available under Section 80TTA should not be reduced from the interest amount paid or credited;

 d) In the case of a joint account, the interest paid or credited should be assigned to the first/primary account holder or specified assigned person as per Form 37BA;

 e) In case of a minor being the account holder, the information shall be reported in the name of Legal Guardian;

 f) Separate report is required to be submitted for each account type (i.e. S-Savings, T-Time Deposit, R-Recurring Deposit, O-Others), and Interest on the same account type is required to be aggregated in the report; and

 g) Interest will be the total amount of Interest paid/credited during the financial year.

How to file SFT?

The information about interest income is required to be uploaded in a data file. Reporting entities are required to prepare the data file in the prescribed format from their internal system. An excel based report preparation utility has also been provided to assist small reporting entities in preparing data files.

Further, reporting entities are also required to provide information on interest income, reported to Income Tax Department, to the account holder (in the form of an Interest Certificate either through email or portal) which will enable them to reconcile the information displayed in the Annual Information Statement (AIS).

Due date to furnish SFT

In respect of interest, SFT shall be furnished on or before the 31st May of the financial year immediately following the financial year in which the transaction is registered or recorded.

Consequences if inaccurate particulars are furnished

If after furnishing SF​T, the reporting person comes to know or discovers any inaccuracy in the information provided in the statement, he shall, within a period of 10 days, inform the Income-tax authority, of the inaccuracy in such statement and furnish the correct information.

If SFT filed is considered to be defective by the Income-tax authority, it shall be intimated to the reporting person. An opportunity shall be given to the reporting person to rectify the defect within 30 days from the date of such intimation. This time limit for rectification of default can be extended further by the Income-tax authority at his discretion on an application made on this behalf.

If the defect is not rectified within 30 days or such an extended period, then it shall be treated as if the reporting person has furnished inaccurate information in the statement.

Penalty (till 30-09-2024)

A person is liable to pay a penalty of Rs. 50,000 under section 271FAA if he furnishes inaccurate information in the statement and:

 a) Such inaccuracy is due to failure to comply with the due diligence to be carried out for the purpose of identification of any reportable account or such inaccuracy is deliberate on the part of the reporting entity; or

 b) The reporting entity knows the inaccuracy at the time of furnishing the statement of financial transaction or reportable account but does not inform the prescribed income-tax authority or such other authority or agency; or

 c) The person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to inform and furnish correct information within 10 days.

Penalty (w.e.f. 01-10-2024)

A person is liable to pay a penalty of Rs. 50,000 under section 271FAA if he:

 a) Provides inaccurate information in the statement or fails to furnish correct information within 10 days; or

 b) Fails to comply with due diligence requirement prescribed under section 285BA(7).

Additional Penalty

An additional penalty of Rs. 5,000¹ on the reporting financial institutions shall be imposed if there is any inaccuracy in SFT and such inaccuracy is due to false or inaccurate information submitted by the holder of reportable accounts. This penalty would be in addition to the penalty amount of Rs. 50,000. The reporting financial institution may recover such penalty amount from the holder of the reportable account.

Consequences if SFT is not furnished

If a person fails to furnish a Statement of Financial Transaction, he is liable to pay a penalty under Section 271FA which shall be Rs. 500 per day for every day during which such default continues.

In case of non-furnishing of SFT within the due date, the prescribed income-tax authority may serve notice upon such person requiring him to furnish SFT within a period not exceeding 30 days from the date of service of such notice. If no report is furnished even within the extended due date specified in the notice, a penalty of Rs. 1,000 per day will be levied from the day immediately following the day on which the time specified in the notice expires.

To file the statement in Form 61A, the reporting entity is required to register with the Income Tax Department and generate Income Tax Department Reporting Entity Identification Number (ITDREIN).

Filing Form 61A is a two-step process:

 a) Register on Reporting Portal and generate ITDREIN; and

 b) Preparation and uploading of Form 61A.

Steps to register on reporting portal and generating ITDREIN

Step 1: Visit https://www.incometax.gov.in/iec/foportal/

Step 2: Login using the User ID and Password.

Step 3: Go to Pending Actions>Reporting Portal.

Step 4:On the next screen, click on the button 'Proceed' to go to the reporting portal.

Step 5: Select New Registration and Click on 'Continue'.

Step 6: Select Form Type

Step 7: Select the Type of Reporting Entity

Step 8: Fill in the details of Reporting Entity

Step 9: Fill in the details of the Principal Officer

Step 10: Click on 'Submit'

Step 11: You will receive a confirmation message on the successful submission of the form.

Step 12: Once an application is submitted successfully, log in details will be shared on the email ID of the designated principal officer

Steps to Prepare Form 61A

Step 1: Visit https://report.insight.gov.in/reporting-webapp/portal/homePage

Step 2: Download Form 61A Utility.

'Report Generation Utility' is a Java-based Desktop Utility. The utility enables the user to generate and validate the XML file which is to be submitted to Income-tax Department.

Step 3: Read the instructions

Step 4: Fill in the details in Form 61A by capturing the statement details and other relevant details depending upon the form type

Step 5: Click on Generate XML button on the toolbar. If there are no validation errors, the user needs to provide the path to save generated XML. Make sure that the XML file so generated should be saved with the'.xml' extension.

Step 6: Sign and encrypt the XML using the 'Generic Submission utility' and prepare a package to be uploaded.

Step 7: Read the instructions

Step 8: Browse XML and sign using Digital Signature Certificate. Your package will be generated successfully.

Steps to Upload Form 61A

Step 1: Visit Reporting Portal at https://report.insight.gov.in/reporting-webapp/portal/homePage

Step 2: Login using details received over email

Step 3: You will be asked to change your password at the time of first login

Step 4: Login with the new password and select the Form type from the dropdown menu

Step 5: Select the ITDREIN of that form from the dropdown menu

Step 6: Click on Proceed after selecting the Form Type and ITDREIN

Step 7: Select the authorized person type from the dropdown and click on proceed.

Step 8:Select Statements

Step 9:Select the option to file statement and upload the file

Upon successful submission, an email with "Acknowledgment Number" will be sent to the registered email id.