Person liable to tax audit u/s 44AB shall file Statement of Financial transactions (SFT) in Form 61A by 31st May 2017


Any person who is liable for audit under section 44AB of the Act and Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature  shall file Statement of Financial transactions (SFT) in Form 61A by 31st May 2017 for the FY 2016-17.

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Relevant issues
Taxpayers who are liable for audit under section 44AB is a new inclusion who are liable for reporting the transactions from the financial year 2016-17 onwards. This will create huge database for the government to do an effective cleaning up of the parallel economy.
The CBDT in its press release dated 22.12.2016 has clarified that besides its Notification No.91/2016 dated 06.10.2016 that the aggregate of cash receipt during the year is not the benchmark for reporting. In other words, the requirement under SFT reporting is receipt of cash payment exceeding Rs.2 lakhs or more for sale of goods or services per transaction.
The following table gives snapshot of the applicability of SFT in respect of general taxpayers whose accounts are audited under section 44AB and because of that they have to file the SFT report.
Nature of transaction Applicability of SFT
Each sale bill below Rs.2 lakhs and aggregate sale during the year to a party below Rs.2 lakhs. ×
Each sale bill below Rs.2 lakhs and aggregate sale during the year to a party above Rs.2 lakhs ×
Any of the sale bill to a party above Rs.2 lakhs but all receipts from the party are by way of cash.
Any of the sale bill to a party above Rs.2 lakhs but all receipts from the party are through banking channel like ECS / NEFT / RTGS / Account payee crossed cheque or draft. ×

Where any of the sale bill to a party is above Rs.2 lakhs but the receipts are mix of both cash and through banking channel then the receipts are to be appropriated sequentially to the earliest bill and in that manner the receipt of cash for bills above Rs.2 lakh is to be identified for reporting in SFT.
Whether the opening balance due from debtor when collected in the financial year 2016-17 by way of cash exceeding Rs.2 lakhs is to be reported, requires clarification. Also, whether in the preceding year any of the sale bill has exceeded Rs.2 lakhs is to be ascertained for the purpose of SFT reporting needs clarification.

The term ‘per transaction’ stated in the press release of the CBDT requires some elucidation. A sale by itself is a transaction and when it is a credit sale the transaction is completed upon sale so far as the seller is concerned and upon purchase as regards the buyer. The subsequent payments when they are piecemeal each of those payments would be a transaction by itself. Only where such payment exceeds Rs.2 lakhs by cash on a single day, the reporting requirement could arise. Anyway, the buyer who has made any such payment will be liable for disallowance under section 40A(3). Then in what way the information given in SFT will be of use to the Department remains to be seen.

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Taxpayer received mail from tax department as under :
​​
From:

DONOTREPLY@incometaxindiaefiling.gov.in [mailto:DONOTREPLY@incometaxindiaefiling.gov.in] 

Sent: ______________

To: _________________

Subject:

​​

Statement of Financial transactions – Form 61A filing & Submitting “SFT Preliminary Response”

Dear __________________________________,
Statement of Financial transactions (SFT) should be filed by all reporting persons covered under Rule 114E of Income-tax Rules, 1962. Due date for filing the same in Form 61A is 31st May 2017. Detailed procedure of ITDREIN registration and upload of Form 61A is available under the “Help” section and updated Form 61A utility and Schema are available under the download section of http://www.incometaxindiaefiling.gov.in/ and https://www.cleanmoney.gov.in/

You are requested to submit the “SFT Preliminary Response” under compliance section post login to eFiling portal.
Online filing of form 61A requires a valid class 2 or 3 digital signature certificate of responsible person filing the same. Please refer “DSC Management Utility” manual under help section on how to generate the signature file, attaching the XML with signature and uploading of XML with signature file in eFiling portal.
Please ignore this mail if already done.

Thanks & Regards,

e-Filing Team


Please refer extract of Rule 114 E of Income Tax Rules:: 

[Furnishing of statement of financial transaction.
114E. (1) The statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in respect of a financial year in Form No. 61A and shall be verified in the manner indicated therein.
(2) The statement referred to in sub-rule (1) shall be furnished by every person mentioned in column (3) of the Table below in respect of all the transactions of the nature and value specified in the corresponding entry in column (2) of the said Table in accordance with the provisions of sub-rule (3), which are registered or recorded by him on or after the 1st day of April, 2016, namely:—
TABLE
Sl. No. Nature and value of transaction Class of person (reporting person)
(1) (2) (3)
1.
(a) Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to ten lakh rupees or more in a financial year.
(b) Payments made in cash aggregating to ten lakh rupees or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007).
(c) Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person.
A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act).
2.
Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.
(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General10 as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).
3.
One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to ten lakh rupees or more in a financial year of a person.
(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898);
(iii) Nidhi referred to in section 406 of the Companies Act, 2013 (18 of 2013);
(iv) Non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934 (6 of 1934), to hold or accept deposit from public.
4.
Payments made by any person of an amount aggregating to—
(i) one lakh rupees or more in cash; or
(ii) ten lakh rupees or more by any other mode, against bills raised in respect of one or more credit cards issued to that person, in a financial year.
A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act) or any other company or institution issuing credit card.
5.
Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company).
A company or institution issuing bonds or debentures.
6.
Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring shares (including share application money) issued by the company.
A company issuing shares.
7.
Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to ten lakh rupees or more in a financial year.
A company listed on a recognised stock exchange purchasing its own securities under section 68 of the Companies Act, 2013 (18 of 2013).
8.
Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring units of one or more schemes of a Mutual Fund (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund).
A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.
9.
Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument of an amount aggregating to ten lakh rupees or more during a financial year.
Authorised person  as referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
10.
Purchase or sale by any person of immovable property for an amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50C of the Act at thirty lakh rupees or more.
Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.
11.
Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10 of this rule, if any.)
Any person who is liable for audit under section 44AB of the Act.
[12.
Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to—
(i) twelve lakh fifty thousand rupees or more, in one or more current account of a person; or
(ii) two lakh fifty thousand rupees or more, in one or more accounts (other than a current account) of a person.
(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).]
[13.
Cash deposits during the period 1st of April, 2016 to 9th November, 2016 in respect of accounts that are reportable under Sl.No.12.
(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).]
(3) The reporting person mentioned in column (3) of the Table under sub-rule (2) [(other than the persons at Sl.No.10 and Sl.No.11)] shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person as specified in column (2) of the said Table,—
(a) take into account all the accounts of the same nature as specified in column (2) of the said Table maintained in respect of that person during the financial year;
(b) aggregate all the transactions of the same nature as specified in column (2) of the said Table 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;
(d) apply the threshold limit separately to deposits and withdrawals in respect of transaction specified in item (c) under column (2), against Sl. No. 1 of the said Table.
(4)(a) The return in Form No. 61A referred to in sub-rule (1) shall be furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data to a server designated for this purpose under the digital signature of the person specified in sub-rule (7) and in accordance with the data structure specified in this regard by the Principal Director General of Income-tax (Systems):
Provided that in case of a reporting person, being a Post Master General or a Registrar or an Inspector General referred to in sub-rule (2), the said return in Form 61A may be furnished in a computer readable media, being a Compact Disc or Digital Video Disc (DVD), alongwith the verification in Form-V on paper.
Explanation.—For the purposes of this sub-rule, “digital signature” means a digital signature issued by any Certifying Authority authorised to issue such certificates by the Controller of Certifying Authorities.
(b) Principal Director General of Income-tax (Systems) shall specify the procedures, data structures and standards for ensuring secure capture and transmission of data, evolving and implementing appropriate security, archival and retrieval policies.
(c) The Board may designate an officer as Information Statement Administrator, not below the rank of a Joint Director of Income-tax for the purposes of day to day administration in relation to the furnishing of returns or statements.
(5) The statement of financial transactions referred to in sub-rule (1) shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded:
 [Provided the statement of financial transaction in respect of the transactions listed at serial number (12) and serial number (13)] in the Table under sub-rule (2), shall be furnished on or before the 31st day of January, 2017.]
(6) (a) Every reporting person mentioned in column (3) of the Table under sub-rule (2) shall communicate to the Principal Director General of Income-tax (Systems) the name, designation, address and telephone number of the Designated Director and the Principal Officer and obtain a registration number.
(b) It shall be the duty of every person specified in column (3) of the Table under sub-rule (2), its Designated Director, Principal Officer and employees to observe the procedure and the manner of maintaining information as specified by its regulator and ensure compliance with the obligations imposed under section 285BA of the Act and rules 114B to 114D and this rule.
Explanation 1.—“Designated Director” means a person designated by the reporting person to ensure overall compliance with the obligations imposed under section 285BA of the Act and the rules 114B to 114D and this rule and includes—
(i) the Managing Director or a whole-time Director, as defined  in the Companies Act, 2013 (18 of 2013), duly authorised by the Board of Directors if the reporting person is a company;
(ii) the managing partner if the reporting person is a partnership firm;
(iii) the proprietor if the reporting person is a proprietorship concern;
(iv) the managing trustee if the reporting person is a trust;
(v) a person or individual, as the case may be, who controls and manages the affairs of the reporting entity if the reporting person is, an unincorporated association or, a body of individuals or, any other person.
Explanation 2.—“Principal Officer” means an officer designated by the reporting person referred to in the Table in sub-rule (2).
Explanation 3.—“Regulator” means a person or an authority or a Government which is vested with the power to license, authorise, register, regulate or supervise the activity of the reporting person referred to in the Table in sub-rule (2).
(7) The statement of financial transaction referred to in sub-rule (1) shall be signed, verified and furnished by the Designated Director specified in sub-rule (6):
Provided that where the reporting person is a non-resident, the statement may be signed, verified and furnished by a person who holds a valid power of attorney from such Designated Director. ]

Refer extract of section 285BA (Obligation to furnish statement of financial transaction or reportable account) on following link:

https://incometaxindia1.blogspot.in/p/obligation-to-furnish-statement-of.html

CBDT Press release 26th May 2017 Clarification on furnishing Statement of Financial Transaction (SFT) & SFT Preliminary Response

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, 26th May, 2017.

PRESS RELEASE

CBDT Issues Clarification on furnishing Statement of Financial Transaction (SFT) & SFT Preliminary Response


Section 285BA of the Income-tax Act, 1961 requires furnishing of a statement of financial transaction (SFT) for transactions prescribed under Rule 114E of the Income-tax Rules, 1962. The due date for filing such SFT in Form 61A is 31st May 2017.

In case there are reportable transactions for the year, the reporting person/entity is required to register with the Income Tax Department and generate Income Tax Department Reporting Entity Identification Number (ITDREIN) The same can be generated by logging-in to the e-filing website (https://incometaxindiaefiling.gov.in/) with the log in ID used for the purpose of filing the Income Tax Return of the reporting person / entity. Entity having PAN can take only PAN based ITDREIN. Entity having TAN can generate an ITDREIN only when such TAN’s Organisational PAN is not available.

The registration of reporting person (ITDREIN registration) is mandatory only when at least one of the Transaction Type is reportable. A functionality “SFT Preliminary Response” has been provided on the e-Filing portal for the reporting persons to indicate that a specified transaction type is not reportable for the year.

Detailed procedure of ITDREIN registration and upload of Form 61A is available under the “Help” section and Form 61A utility and Schema are available under the download section of http://www.incometaxindiaefiling.gov.in and https://www.cleanmoney.gov.in. Online filing of form 61A requires a valid class 2 or 3 digital signature certificate of person responsible for filing the same. Please refer “DSC Management Utility” manual under help section on how to generate the signature file, attaching the XML with signature and uploading of XML with signature file in e-Filing portal.

(Meenakshi J Goswami)
Commissioner of Income Tax
(Media and Technical Policy)
Official Spokesperson, CBDT.

Query:  jayadevassociates31 May 2017 at 05:48

sir, is it aggregate of various receipts of cash against sale from person in a year or single cash receipt of rs.2 lakhs and above in a year… please clarify

Reply: 



Please understand Rule 114E transaction requiring any person who is liable for audit under section 44AB of the Act is liable to report, on yearly basis, all his transactions involving receipt of cash payment exceeding two lakh rupees for sale of goods or services of any nature in Form 61A electronically.


Sr. No.
Nature of Transaction
Yearly Reporting in Form 61A w.e.f. (01.04.16)
(1)
(2)
(3)
1
Single Bill below Rs. 2,00,000/-.
1.a
– Full Recovery in cash
NO
1.b
– Part recovery in cash
NO
1.c
– Full recovery by Cheque
NO
2
Single Bill exceeding Rs. 2,00,000/-.
2.a
– Full Recovery in cash on single occasion
YES
2.b
– Part recovery in cash below Rs. 2 Lacs
NO
2.c
 – Part recovery in cash above Rs. 2 Lacs on single occasion
YES
2.d
– Part recovery in cash above Rs. 2 Lacs on multiple occasions but not a single receipt exceeds Rs. 2 Lacs
NO
2.e
– Full recovery by Cheque
NO
3
Multiple Bills issued during year to same person and the aggregate bill amount exceeds Rs. 2,00,000/-. (However, not even a single bill exceeds Rs. 2 Lacs)
3.a
– Full Recovery in cash on single occasion
YES
3.b
– Part recovery in cash above Rs. 2 Lacs on multiple occasions (on different days) but not a single receipt exceeds Rs. 2 Lacs
NO
3.c
– Part recovery in cash above Rs. 2 Lacs on multiple occasions (IN SINGLE DAY) but not a single receipt exceeds Rs. 2 Lacs
NO
  3.d
 – Part recovery in cash above Rs. 2 Lacs on single occasion
YES
3.e
– Full recovery by Cheque
NO

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