Section 285BA and Rule 114E deal with the filing of Statement of Financial Translations (SFT) in Form 61A by various persons/reporting entities. Section 285BA was further amended in 2019 by the Finance (No. 2) Act, 2019 to enable pre-filling of return of income, It was also intended to obtain information by widening the scope of furnishing of statement of financial transactions by mandating the furnishing of statements by reporting entity.
It is mandatory for a specified reporting entity to furnish a statement of financial transaction or reportable account as per Section 285BA of the Income Tax Act,1961.
In order to furnish a statement of financial transactions, specified forms are required to be submitted as per Rule 114E of Income Tax Rules, 1962 referred to as “Statement of Financial Transaction (SFT).
Instances have come to the notice of the income-tax department that certain reporting entity has not complied with these statutory provisions.
In one case, during the course of the verification of a prominent Bank based in Tamil Nadu, the income-tax department found several discrepancies
It is stated by the department in a Press Release dated 30.06.2023 that the bank had not filed SFTs in certain cases and in some others, had not filed complete/accurate particulars. SFTs were not filed in respect of Cash deposits of over Rs.2,700 crore involving more than 10,000 accounts; specified Credit card payments involving total transaction value of over Rs.110 crore; Dividend distributed of more than Rs.200 crore and Shares issued of over Rs.600 crore.
Further, the bank had failed to report major transactions which included Interest paid of more than Rs.500 crore; Time deposits; Cash deposits and withdrawals in current accounts, etc.
Defects were also revealed in the filing of Form 61B for Automatic Exchange of Information (AEOI) about account holders “resident” in other countries.
It was further informed that during verification in Uttarakhand transactions exceeding a few thousand crore were not reported by the banks by 2 co-operative banks.
In order to explain the legal obligations and processes, as well as to address difficulties faced by the Reporting Entities, outreach programmes are being regularly organised by the Department across the country. This is another initiative of the Department to facilitate ease of compliance.
Read more on Section 285BA and Rule 114E on furnishing of Statement of Financial Translations (SFT) by a Reporting Entity
A Guide to Section 285BA and Rule 114E on Statement of Financial Translations (SFT) in Form 61A
CBDT Amends Rule 114E to Report Capital Gains, Interest and Dividend Income for Pre-filling Return
CBDT Amends SFT reporting for all Interest income u/s 285BA and Rule 114E
Read the full text of Press Release dated 30.06.2023 on Verification of Reporting Entities
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 30th June, 2023
PRESS RELEASE
I-T Department Conducts Verification of Reporting Entities
The Income-Tax Department has been focusing its efforts on promoting voluntary compliance. In this endeavour, information is received about financial transactions of taxpayers from Reporting Entities, such as Banks, Forex Dealers, Sub-Registrars, etc. The information furnished by the Reporting Entities is used for display to the taxpayer, through the e-filing account, in the form of the Annual Information Statement (AIS). This is an important step towards facilitating taxpayers for filing their Return of Income accurately.
While most Reporting Entities are voluntarily complying with the statutory requirements of filing correct and complete Statements of Specified Financial Transactions (SFTs), defaults have been noticed in some cases.
Recently, the Department carried out verification of a prominent Bank based in Tamil Nadu, to address Reporting Entity compliance issues.
During the course of verification, several discrepancies were found. It was seen that the bank had not filed SFTs in certain cases and in some others, had not filed complete/accurate particulars. SFTs were not filed in respect of Cash deposits of over Rs.2,700 crore involving more than 10,000 accounts; specified Credit card payments involving total transaction value of over Rs.110 crore; Dividend distributed of more than Rs.200 crore and Shares issued of over Rs.600 crore.
Further, SFTs already filed by the Bank were found incomplete in several respects. The bank had failed to report major transactions which included Interest paid of more than Rs.500 crore; Time deposits; Cash deposits and withdrawals in current accounts, etc.
The verification also revealed defective filing of Form 61B for Automatic Exchange of Information (AEOI) about account holders “resident” in other countries.
In the recent past too, verification was conducted by the Department on 2 cooperative banks in Uttarakhand and transactions exceeding few thousand crore, not reported by the banks, were identified.
In order to explain the legal obligations and processes, as well as to address difficulties faced by the Reporting Entities, outreach programmes are being regularly organised by the Department across the country. This is another initiative of the Department to facilitate ease of compliance.
(Surabhi Ahluwalia)
Pr. Commissioner of Income Tax (Media & Technical Policy) &
Official Spokesperson, CBDT
Download Press Release dated 30.06.2023 on Verification of Reporting Entities in PDF format
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