Statement of Financial Transactions (SFT) – A new Burden on Businessmen ?

 

As per section 285BA of the Income-tax Act, 1961, specified persons are required to report transactions prescribed under Rule 114E of the Income-tax Rules, 1962, which are registered or recorded on or after 1.4.2016, by furnishing statement of financial transaction in Form No. 61A.  In respect of transactions registered or recorded in the Financial Year 2016-17, the statement of financial transaction has to be furnished by such persons on or before 31^st May, 2017. 

It may be noted that Rule 114E, substituted with effect from 1.4.2016, also requires any person who is liable for audit under section 44AB of the Income-tax Act, 1961 to report transaction of receipt of cash payment exceeding Rs. 2 lakh (per transaction) for sale of goods or services of any nature in the Financial Year 2016-17.  The scope of transactions to be reported by banks under new Rule 114E has also been expanded.  Also, the value of transactions in respect of which reporting is required has undergone a change. Co-operative banks, NBFCs, Nidhi, companies listed on a recognised stock exchange purchasing its own securities and Post Master General are also required to report relevant transactions of the nature and value specified in Rule 114E from F.Y.2016-17.

In this context, the procedure for registration and submission of statement of financial transactions as per section 285BA of Income-tax Act, 1961 read with Rule 114E of Income-tax Rules, 1962, contained in CBDT Notification No. 1/2017 dated 17/1/2017, is available at http://www.incometaxindia.gov.in/communications/notification/systemnotification1_2017.pdf .  This Notification also contains the details of the nature and value of transactions & class of persons who are required to report such transactions.

Accordingly, these requirements should be understood by those  persons who are liable for tax audit under section 44AB or other specified persons who are required to report such transactions or the employer (being a specified person required to report such transactions), as the case may be, so that the statement of financial transaction in respect of specified transactions registered or recorded in the Financial Year 2016-17 is filed by them on or before 31^st May, 2017.