The SFT is an important tool for the Income-tax Department to track high-value transactions and to identify potential tax evasion.
AStatement of Financial Transactions (SFT) is a document that must be filed by certain prescribed entities in India. The SFT provides information on specified financial transactions or any reportable account registered/recorded/maintained by the entity during the year. The information in the SFT is used by the Income-tax Department to keep a track of specified financial transactions carried on by a person during the year.
Read More: Advance Tax Payments By Companies On Income Tax Radar: Report
The Income Tax Department has tweeted informing about the key details of SFT.
“Last date to file Statement of Financial Transactions (SFT) for FY 2022-23 is May 31st, 2023. Delay in filing SFT may entail penalty upto Rs 1000 for each day of default. Non-filing or filing inaccurate statements may also lead to levy of penalty,” the IT department said.
Who needs to file SFT?
SFT has to be filed if your are;
- Sub Registrar
- Co-operative bank
- Banking company
- NBFC
- Nidhi
- Postmaster general
- Issue of bonds, debentures or shares
- Trustee of mutual fund or managing affairs of mutual fund
- Foreign exchange dealer
- Supplier of goods and services (whose accounts are required to be audited under section 448B of the IT Act
- Company paying dividend
- Company buying back its shares Read More: Income Tax department notifies scheme for online filing and processing of appeals
The SFT must be filed immediately following the financial year in which the transaction is registered or recorded. The SFT can be filed electronically or in paper form.
The SFT is required to be filed in Form No. 61A for transactions entered with third parties during FY 2022-23 as per rule 114E of the IT Rules, 1962.
Read More: Income Tax Returns Filing: Can Non-Salaried Persons Claim House Rent Allowance?
The following information must be provided in the SFT:
- The name and address of the reporting entity
- The PAN of the reporting entity
- The type of transaction
- The date of the transaction
- The amount of the transaction
- The name and address of the other party to the transaction
The SFT is an important tool for the Income-tax Department to track high-value transactions and to identify potential tax evasion. By filing the SFT, the reporting entities are helping the Income-tax Department to enforce the tax laws and to ensure that everyone pays their fair share of taxes.
