Section 285BA of the Income tax Act,1961 introduces the concept of filing of SFT form 61A by certain authorities carrying out such transactions. One of the ways of filing Statements of Specified Financial Transactions is through Form 61A. This form is required to be filed by all authorities listed in section 285BA of the IT Act, only after they qualify for its eligibility, by surpassing the threshold amount of significant transactions as mentioned in the Income Tax Rules 1962. This article, however, discusses the eligibility of tax audit assesses and companies for filing form 61A to the Income Tax Department of India.
Filing of SFT form 61A can be done on the “Reporting Portal” of the IT Department, and can be filled online on or before its due date. A failure to do so shall result in the imposition of hefty penalties for the taxpayer. While the cost of penalties may increase the overall cost of filing of SFT Form 61A sharply, furnishing incorrect and misleading information shall possibly worsen the situation. This is because the income tax authorities utilize the statement of SFT filed in form 61A to verify the amount of taxes paid by eligible taxpayers as a percentage of the transactions.
Filing of SFT Form 61A
Specified Financial Transactions, as mentioned in Section 285BA of the Income Tax Act 1961, are a list of certain transactions undertaken and recorded by specific authorities in a financial year. Such authorities are required to intimate the IT department of every SFT carried out by them, in a financial year, in the form of a “Statement of SFT”, formerly known as “Annual Information Returns”. Filing of SFT Form 61 A to the IT department is mandatory by eligible authorities, every financial year. Listed below are the transactions that qualify as SFTs along with the corresponding authorities undertaking and recording them.
| S.No. | List of transactions considered as SFTs | List of Authorities who must file Statements of SFT | |
|---|---|---|---|
|
1
|
Purchase of Bank Drafts or Pay Orders in cash
|
Banking Companies and Cooperative Banks
|
|
|
2 |
Purchase of prepaid instruments in cash
|
Banking Companies and Cooperative banks
|
|
|
3
|
Cash deposit and withdrawals in current account
|
Banking Companies and Cooperative Banks
|
|
|
4 |
Cash deposit in accounts other than current account
|
Banking Companies, Cooperative Banks, and Post Offices
|
|
|
5 |
Time deposits
|
Banking Companies, Cooperative banks, and Post Offices
|
|
|
6 |
Digital or Cash Payment of credit cards
|
Banking Companies, Cooperative Banks, Postmaster General
|
|
|
7 |
Purchase of shares
|
Any company issuing shares
|
|
|
8 |
Purchase of bonds and debentures
|
Any Company or Institution issuing bonds and debentures
|
|
|
9 |
Purchase of mutual fund units
|
A Mutual Funds Manager or Trustee
|
|
|
10 |
Buyback of shares, in case of listed companies
|
Listed Company
|
|
|
11 |
Purchase of foreign currency
|
A dealer of Foreign Exchange
|
|
|
12 |
Purchase and sale of immovable property
|
Inspector General/ Registrar/ Sub-Registrar appointed under the Registration Act
|
|
|
13 |
Cash Payments for goods and services
|
Tax Audit Assessee
|
|
|
14 |
Dividend and Interest Income
|
Companies |
|
SFT Form 61A
Form 61 A is a Statement of Specified Financial Transactions filed in the pursuance of Section 285BA of the Income Tax Act (1961), read with Rule 114E of the Income Tax Rules (1962). The Statement contains SFTs that involve significant amounts of transactions carried out by the above-mentioned authorities. Such authorities are required to file Form 61A reporting such significant transactions, as and when prescribed by law. Form 61A can be filed on or before 31st of May every year, for the immediately preceding financial year.
Filing of SFT Form 61A can be done by any of the above mentioned authorities, provided the specified financial transactions carried out by them qualify as “significant transactions” under Income Tax Rules. However, in this article, we are only concerned with companies and tax audit assessees eligible for filing the form, only if the following conditions are satisfied:
| S.No. | Companies |
|---|---|
|
1 |
SFTs concerning receipts against the issuance of shares to a single person exceeds Rs.10 Lakhs
|
|
2 |
SFTs concerning receipts against the issuance of bonds and debentures to a single person exceeds Rs.10 Lakhs |
|
3 |
SFTs concerning payments against buyback of shares by listed companies exceeds Rs.10 Lakhs |
| Tax Audit Assessee |
|---|
|
SFT concerning receipts against a single cash payment regarding the sale of goods or services exceeds Rs.2 lakhs
|
How to File Form 61A on Reporting Portal?
Stepwise procedure of Filing of SFT Form 61A
Step 1: Login to the IT Portal using your PAN information.
Step 2: Go to “Pending Actions” and then to “Reporting Portal”.
Step 3: Register on the reporting portal, after which you will receive a User ID, password, and an identification number.
Step 3: Register on the reporting portal, after which you will receive a User ID, password, and an identification number.
Step 4: Using the User ID and Password, login to the Reporting Portal.
Step 5: Go to “Resources” and download two utilities, namely, Report Generation and Validation Utility to prepare and validate the filing of SFT form 61A, and Generic Submission Utility to generate and digitally sign the submission file.
Step 6: Using the utilities, you can either upload the form and then digitally sign it using a Digital Signature Certificate, or directly
upload the package containing the form already signed using a Digital Signature Certificate. The form in both cases shall be
contained in a .XML file.
Step 7: After the file containing form 61A is uploaded, a “data quality report” is generated to validate the filing of SFT form 61A. If the form submitted is error-free, a message on the screen reading “DQR Successfully Submitted” is displayed, ensuring the successful filing of SFT form 61A.
Penalty of non-compliance of filing of SFT form 61A
The due date for filing of SFT form 61A is 30th May every year, for the immediately preceding financial year. If the form is not filed until its due date, Rs 500 shall be charged as penalty for every day of delay. Additionally, if the Income Tax department has served any notice to the taxpayer mentioning a second deadline, and the taxpayer crosses it too, the amount of penalty charged will be raised to Rs.1,000 for every day of delay. Submitting incorrect or misleading filing of form SFTs in the form shall result in the penalty of Rs. 50 for every such transaction.
Under-reporting, underpayment, and evasion of taxes is a massive problem faced by the Income tax Department of India. These problems often lead to real-time tax deficits, followed by consequent debt accumulations and budgetary imbalances for the India treasury. Overcoming such problems through several government compliances has become extremely urgent for the Indian government for the overall growth and development of the Indian economy. Form 61A is one of such mandatory compliances that every eligible taxpayer needs to file on a predetermined due date every year.