SFT Reporting
1. What is the legal framework for reporting Statement of Financial Transactions (SFT)?
Section 285BA of the Income Tax requires specified reporting persons to furnish the statement of the financial transaction. Rule 114E of the Income Tax Rules, 1962 specifies that the statement of the financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in Form No. 61A.
2. Who is required to file Statement of Financial Transactions (SFT)?
As per Rule 114E, following persons are required to furnish statement of financial transactions registered or recorded or maintained by them during a financial year to the prescribed authority.
Any person who is liable for audit under section 44AB of the Income-tax Act
A Banking Company
A Co-operative Bank
Post Master General of Post office
A Nidhi referred to in sec 406 of the Companies Act 2013
A Non-banking Financial Company (NBFC)
Any Institution issuing Credit Card
A Company or Institution issuing bonds or debentures
A Company issuing shares
A company listed on a recognised stock exchange purchasing its own securities
A Trustee of a Mutual Fund or such other person authorized by the trustee
Authorized Dealer, Money Changer, Off-shore Banking Unit or any other person defined in FEMA, 1999
Inspector-General or Sub-Registrar appointed under Registration Act, 1908
3. What is the periodicity and due date of furnishing statement of the financial transaction?
The statement of financial transactions (online return in Form No. 61A with digital signature) shall be furnished on or before 31st of May, immediately following the financial year in which the transaction is registered or recorded. Section 285BA (5) empower the tax authorities to issue a notice to a person who is required to furnish a statement as above and who has not filed the statement within prescribed time,
requiring person to furnish the statement within a period not exceeding 30 days from the date of service of
such notice and in such case, the person shall furnish the statement within the time as specified in the notice.
4. How can an entity comply with reporting obligation?
To comply with reporting obligation, the statements need to be filed by all reporting entities in a prescribed
format and within the prescribed timeline.
5. What are the consequences of not furnishing the statement of financial transactions or reportable accounts?
Failure to furnish the statement of financial transaction or reportable account will attract a penalty under section
271FA at the rate of one hundred rupees for every day during which such failure continues.
As per provisions of section 285BA(5), the prescribed Income-tax authorities may issue a notice to a person
who is required to furnish such statement and has not furnished the same in the prescribed time, directing the person to file the statement within a period not exceeding 30 days from the date of service of such notice and in such case, the person shall furnish the statement within the time specified in the notice.
If such person fails to file the statement within the specified time then a penalty of Rs. 500 for every day for which the failure continues, may be levied from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.
6. What are the consequences of failure to correct Inaccurate or defective statement of financial transaction or reportable account filed?
As per section 271FAA of the Income-tax Act, if a person who is required to furnish the 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.
SFT Reporting
SFT Reporting Format
1. What has prescribed the format for the statement of financial transaction (SFT)?
All statements uploaded to the Reporting Portal should be in the XML format consistent with the prescribed
schema published by the Income-tax Department. The Reporting entities may use the utilities provided by
the Income-tax Department or third-party utilities for preparation of XML file. For more details refer to “Report
Generation Utility User Guides” available in “Resources” section of Reporting Portal.
2. What is a Statement?
A Statement is a file which contains many reports containing details of financial transactions (SFT) (Form 61A). A statement may contain multiple reports.
3. How to identify reportable transactions under SFT?
The first step in the preparation of Statement of Financial Transactions (SFT) is to identify transactions/persons/accounts which are reportable under Rule 114E. In the second step, reporting person/entity is required to submit details of transactions/persons/accounts which are determined as reportable.
4. What is aggregation rule?
Aggregation rule needs to be applied for specified transaction types to identify
transactions/persons/accounts which are reportable. Rule 114E specifies that the reporting person shall,
while aggregating the amounts for determining the threshold amount for reporting in respect of any person
(a) take into account all the accounts of the same nature maintained in respect of that person during the financial year;
(b) aggregate all the transactions of the same nature recorded in respect of that person during the financial
year;
(c) attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons, in a case where the account is maintained or transaction is recorded in the name of more than one person;
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).
5. What are different parts of Form 61A?
Form 61A has two parts. Part A which contains statement level information is common to all transaction types. The report level information has to be reported in one of the following parts (depending of the transaction type):
Part B (Person Based Reporting)
Part C (Account Based Reporting)
Part D (Immovable Property Transaction Reporting)
6. What is Person Based Reporting (Part B)?
Part B shall be used for person based reporting which is relevant to following transactions:
SFT- 001: Purchase of bank drafts or pay orders in cash
SFT- 002: Purchase of pre-paid instruments in cash
SFT- 005: Time deposit
SFT- 006: Payment for credit card
SFT- 007: Purchase of debentures
SFT- 008: Purchase of shares
SFT- 009: Buyback of shares
SFT- 010: Purchase of mutual fund units
SFT- 011: Purchase of foreign currency
SFT- 013: Cash payment for goods and services.
For determining reportable persons and transactions, the reporting person/entity is required to aggregate all
the transactions of the same nature recorded in respect of the person during the financial year (refer to the applicability of aggregation rule). In a case, where the transaction is recorded in the name of more than one person, the reporting person/entity should attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons.
The reporting person/entity is required to submit details of persons and transactions which are determined as reportable. The reporting format also enables reporting person/entity to furnish information relating to each individual product within a product type. E.g: if a person has multiple credit cards and the aggregate value of the transactions in all credit cards exceeds the threshold value, the aggregate transaction value will be reported in section B3 of form 61 A and the transactions pertaining to individual credit cards can be reported in section B4 of form 61 A.
7. What is Account Based Reporting (Part C)
Part C shall be used for account-based reporting which is relevant to following transactions:
SFT- 003: Cash deposit in the current account
SFT- 004: Cash deposit in account other than the current account
SFT- 014: Cash deposits during the specified period (9 th Nov to 30th Dec, 2016).
For determining reportable persons and accounts, the reporting person/entity is required to take into account
all the accounts of the same nature maintained in respect of that person during the financial year and aggregate all the transactions of the same nature recorded in respect of the person during the financial year (refer to the applicability of aggregation rule). In a case where the account is maintained in the name of more than one person, the reporting person/entity should attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons. In case of SFT- 003 (Cash deposit or withdrawals in the current account), the threshold limit has to be applied separately to deposits and withdrawals in respect of transactions. After identification of reportable persons and accounts, the reporting person/entity is required to submit details of accounts which are determined as reportable. Part C3 of the form 61 A has details of the accounts that need to be reported along with the aggregate transaction values. Aggregation of the transaction has the same definition as explained in the person based accounting.
8. What is Immovable Property Transaction Reporting (Part D)?
Part D shall be used for reporting of purchase or sale of immovable property (SFT- 012). The reportable immovable property transactions have to be determined by applying the threshold limit. The reporting person/entity is required to submit specified details of immovable property transactions which are determined as reportable.
9. What are different Statement types?
One Statement can contain only one type of Statement. Permissible values for type of Statement are:
NB – New Statement containing new information
CB – Correction Statement containing corrections for previously submitted information
ND – No Data to report
10. What is the difference between Statement Number and Statement ID?
Statement Number is a free text field capturing the sender’s unique identifying number (created by the sender) that identifies the particular Statement being sent. The identifier allows both the sender and receiver to identify the specific Statement later if questions or corrections arise. After successful submission of the Statement to ITD, a new unique Statement ID will be allotted for future reference. The reporting person/entity should maintain the linkage between the Statement Number and Statement ID.
In case the correction statement is filed, statement ID of the original Statement which is being corrected should be mentioned in the element ‘Original Statement ID’. In case the Statement is new and unrelated to any previous
Statement, ‘0’ will be mentioned in the element ‘Original Statement ID’
11. What is original statement Id?
Statement ID of the original Statement which is being replaced deleted or referred by reports in the current
Statement. In case the Statement is new and unrelated to any previous Statement, mention ‘0’ here.
12. What is Report Serial Number?
The Report Serial Number uniquely represents a report within a Statement. The Report Serial Number should
be unique within the Statement. This number along with Statement ID will uniquely identify any report received by ITD. In case of correction, the complete report has to be resubmitted. The Report Serial Number of the original report that has to be replaced or deleted should be mentioned in the element ‘Original Report Serial Number’. This number along with Original Statement ID will uniquely identify the report which is being corrected. In case there is no correction of any report, ‘0’ will be mentioned in the element ‘Original Report Serial Number’.
13. What is Original Report Serial Number?
The Report Serial Number of the original report that has to be replaced or deleted. This number along with Original Statement ID will uniquely identify the report which is being corrected. In case there is no correction of any report, mention ‘0’ here.
14. What needs to be captured in Form 61 Acknowledgement No.?
If reporting person/entity has received declarations in Form 60 in respect of transactions listed in Rule 114E, Form 61 is required to be furnished to ITD. As mentioned in Chapter I, on successful loading of Form 61 (containing the particulars of Form 60), an Acknowledgement No. would be generated which has to be mentioned at the time of filling Form 61A. Hence, unless Form 61 has been furnished, Reporting person/entity may face difficulty in filling Form 61A. Accordingly, it is to be ensured that Form 61 is furnished to the Department before Form 61A is filled.
SFT Reporting
Preparation of SFT using Report Generation Utility
1. What is a Report Generation Utility?
Report Generation Utility is a desktop utility based on java. The utility enables user to generate and validate XML file which is to be submitted to Income-tax Department.
2. How to download and install the Report Generation Utility on a windows platform?
The Report Generation Utility can be downloaded from “Resources” section of the Reporting Portal. The downloaded zip file has to be extracted using WinZip or WinRAR tools.
3. Is any other software required to be installed to use Report Generation Utility?
Yes. Report Generation Utility requires JRE to run on Windows based operating system. Download and install JRE version 1.8 Update 101 or later.
4. How to run the Report Generation Utility?
Step 1: Unzip the downloaded utility
Step 2: Click on RGU-Form61A-v1.jar file to run the utility.
5. How to prepare a statement using Report Generation Utility?
Step 1: Go to Reporting Portal at https://report.insight.gov.in
Step 2: Download Report Generation Utility from “Resources” section
Step 3: Select the Transaction Type (for Form 61A) on Instructions window
Step 4: Capture Statement Details and other relevant details depending upon the form type
For more details refer “Report Generation Utility User Guides” in Resources section of Reporting Portal.
6. How to capture data in the Report Generation Utility?
Data can be captured either by data entry or by importing CSV.
7. How to load an existing XML file?
8Select the saved XML file using the Open button from the tool bar.
9. What date format should be used while filling CSV?
bUser should use DD-MM-YYYY format while entering data in CSV. If date is entered in incorrect format, the
CSV will not be imported successfully
10. Can data be saved before generating the XML file in Report Generation Utility?
Yes. User can save the data using the “Save” button in the toolbar. The data is saved with a draft extension.
To retrieve the saved data in the utility, use the “Open” button from the toolbar.
11. How to capture information for an account with more than one account holder?
For an account with more than one account holder, a user needs to enter multiple record rows, where account details (including “Report Serial Number”) will be repeated for each account holder. The utility will automatically create reports with unique Report Serial Number.
12. How to view information after importing CSV?
After successful CSV import, data is visible in the relevant tabs of the utility.
SFT Reporting
Validation of SFT using Report Generation Utility
1. What is the purpose of Statement Validation?
Validation is a process of applying the data input rules to ensure that the data is in the prescribed format.
Errors in data entry will be highlighted during the process of validation.
2. How can a statement be validated?
Step 1: Click on “Validate” button on the tool bar
Step 2: Utility will display validation errors on “Validation” Tab
Step 3: Click on Validation row to see details of Validation errors on the right window pane of screen
Step 4: Click on any particular validation error from list, utility will show the field highlighted in red, where
corrections can be made
Step 5: Fix the errors and then click on Validate button again
Step 6: If there are no validation errors, “Validation Successful” dialog box is displayed to the user.
In addition, certain validations will be applied by the Income Tax Department at their end.
For more details refer “Report Generation Utility User Guides” in Resources section of Reporting Portal.
3. Is it mandatory to validate the statement?
Yes. Otherwise, statements with validation errors will be rejected in data quality check.
4. What are various types of validation errors?
The errors have been classified as mandatory errors, defects and exceptions.
5. What are mandatory errors?
Mandatory errors need to be resolved by user for successful generation of XML report. These are generally schema level errors. For resolving these type of errors, the data filled should be as per the Form 61A schema validation.
6. What are defects?
Defects can be Statement level defects or Report level Defects. Statement Defects are those which render the
Statement (Part A) defective. Such Statements will be rejected and the Reporting Entity needs to resubmit the statement. Report defects are those which render a particular report(s) (Part B/C/D) as defective in the statement. A statement may have multiple reports and only reports with defects would be rejected. The Reporting Entity needs to correct and submit the reports again in the corrected statement.
7. What are exceptions?
Exceptions do not result in the statement/report being rejected. The exceptions should be reviewed by the reporting person/entities and if any information is available, the Reporting Entity may provide the information. If any defect is noticed, the Reporting Entity needs to rectify the defect by submitting a correction statement.
8. How to identify validation errors?
When user clicks on the validate button, validation summary is displayed in the Validation Error tab. On selecting a particular row on the validation error screen, error details are displayed on the section on the right side. On selecting the error, user is directed towards the erroneous field on the screen.
9. How to rectify validation errors?
User can navigate to erroneous fields via Validation Error Details section on the right side of the screen.
Erroneous fields are highlighted in Red and are editable for user to correct.
SFT Reporting
Generation of SFT using Report Generation Utility
1. How to generate and save the statements?
Step 1: Click on Generate XML button on the toolbar.
Step 2: If there are no validation errors, user needs to provide the path to save generated XML.
2. What is the extension of generated XML file?
Generated XML file should have ‘.xml’ extension.
SFT Reporting
Upload of SFT on Reporting Portal
1. What are the steps to submit the statement? Step 1: Once XML is generated, sign and encrypt the XML using the Submission utility and prepare the package to be uploaded.
Step 2: Submit the statement on Reporting Portal
Step 3: Upon successful submission, an email with “Acknowledgment Number” will be sent to the registered email id. For more details, refer “SFT quick reference Guide”, “Reporting Portal User Guide” in Resources section of Reporting Portal.
2. Who can submit the statement?
Only Designated Director of Reporting Entity can submit the statement
SFT Reporting
Data Quality Report (DQR)
1. What is Data Quality Report (DQR)?
The Data Quality Report contains details of the data quality errors present in the statement submitted by
the Reporting Entity. DQR helps Reporting Entity(s) in identifying the errors in data submitted.
2. Why is Data Quality Report (DQR) required?
The report cannot be considered accurate if there are data quality errors. It is mandatory for Reporting
Entities to file accurate reports in the prescribed formats as per law. Failure to comply with the provisions of
law may attract penal provisions.
3. What should be Reporting Entity’s next course of action after receiving DQR?
Step 1: Download the DQR from Reporting Portal.
Step 2: Correct the statement for removal of Data quality errors using the offline utility as mentioned in DQR
Step 3: Validate and submit the correction statement.
Step 4: Upon successful submission, an email with “Acknowledgment Number” will be sent to the registered email id.
Step 5: Download the data quality report, if any.
Step 6: Repeat steps 1 to 5 till there are no more data quality errors.
SFT Reporting
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