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New Form 26AS to show Specified Financial Transactions (SFT) in Part E


new-form-26as-to-show-specified-financial-transactions-sft-in-part-e

It is stated that the information being received by the Income Tax Department from the filers of these specified SFTs is now being shown in Part E of Form 26AS to facilitate voluntary compliance, tax accountability and ease of e-filing of returns so that the same can be used by the taxpayer to file her or his income tax return (ITR) by calculating the correct tax liability in a feel-good environment. This would also bring in further transparency and accountability in the tax administration.


The income tax department vide a Press Release dated 18th July 2020 informed that Part-E of the new Form 26AS will show Specified Financial Transactions (SFT)  from “specified persons" like banks, mutual funds, institutions issuing bonds and registrars or sub-registrars etc., under section 285BA of Income-tax Act, 1961.


The objective of improving the Form 26AS is to enable a taxpayer to file his income tax return correctly and smoothly without missing any financial transactions carried out by the taxpayer during a financial year. The new Form 26AS will act as a ready reckoner for the taxpayer. This will help the taxpayer in computing his total income correctly and consequently, the tax liability.


The earlier Form 26AS used to give information regarding tax deducted at source and tax collected at source relating to a PAN, besides certain additional information including details of other taxes paid, refunds and TDS defaults. But now, it will have SFTs to help the taxpayers recall all their major financial transactions so that they have a ready reckoner to enable them while filing the ITR.


It is stated that the Form 26AS for any taxpayer, from now onwards, will display in Part E of the Form 26AS, different fields such as type of transaction, name of SFT filer, date of transaction, single/joint party transaction, number of parties, amount, mode of payment and remarks etc.


Read More on Specified Financial Transactions (SFT) and Section 285BA here


Section 285BA(1) prescribes the following persons as ‘specified  persons’ for the purpose of furnishing SFT:


An assessee i.e. who is liable to pay tax under the Income Tax Act


[The meaning of the word “assessee” should be taken from Section 2(7) of the Income Tax Act,1961 where it states that  "assessee" means a person by whom any tax or any other sum of money is payable under this Act, and includes—

(a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or assessment of fringe benefits or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person ;

(b) every person who is deemed to be an assessee under any provision of this Act ;

(c) every person who is deemed to be an assessee in default under any provision of this Act.]

Government Office

A local authority or other public body or association

Registrars or Sub-Registrars 

Motor Vehicles registration authority

Post Office

Collector in case of Land acquisitions etc.

Recognised stock exchanges

Reserve Bank of India

A Depository

Any prescribed reportable financial Institution


The above persons are required to report the financial transactions which have been prescribed by the CBDT in Rule 114E. Till such transactions are prescribed, no such reporting is required under this section. For example, no rules have been prescribed for reporting of financial transactions by stock exchanges.


Out of the above specified persons, Rule 114E prescribes the following ten types of persons as ‘reportable persons’ and hence they are in vogue since the nature of financial statements and reporting requirements have been prescribed for these persons only by the Board so far-


A Bank including a Co-operative Bank

Post Office/Post Master General

A Nidhi Company

Non- Banking Financial Companies (NBFCs)

Credit Card Issuing Companies

A Company

Mutual Funds

Authorised person under Foreign Exchange Management Act, 1999

Registrar or Sub-Registrar

Any person who is liable for audit under section 44AB of the Act.


A Reporting Entity or a Reporting Person is an entity which is required to furnish a Statement of Financial Transaction (in Form 61A) or Statement of Reportable Account (in Form 61B) with the Income Tax Department as per the provisions of section 285BA of the Income Tax Act 1961.


Under Rule 114E, the following reporting persons are required to report the prescribed financial statements in the statement of financial transactions or SFT-


Reporting Person

Nature and Value of financial transactions

A Bank including a Co-operative Bank

(1) Payment made in cash for purchase of bank drafts or pay orders or banker's cheque of an amount aggregating to Rs. 10 Lakh or more in a financial year.


(2) Payments made in cash aggregating to Rs. 10 Lakh  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).


(3) Cash deposits or cash withdrawals (including through bearer's cheque) aggregating to Rs. 50 Lakh  or more in a financial year, in or from one or more current account of a person.


(4) Cash deposits aggregating to Rs. 10 Lakh  or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.


(5) One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to Rs. 10 Lakh  or more in a financial year of a person.


(6) Payments made by any person of an amount aggregating to—


(i) Rs. 1 Lakh  or more in cash; or


(ii) Rs. 10 Lakh 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.

Post Office/Post Master General

(1) Cash deposits aggregating to Rs. 10 Lakh  or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.


(2) One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to Rs. 10 Lakh  or more in a financial year of a person.

Nidhi Company and Non- Banking Financial Companies (NBFCs)

One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to Rs. 10 Lakh  or more in a financial year of a person.


The following transactions may also apply to an NBFC:


Receipt from any person of an amount aggregating to Rs. 10 Lakh 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).


Receipt from any person of an amount aggregating to Rs. 10 Lakh or more in a financial year for acquiring shares (including share application money) issued by the company. 


[It applies for allotment of shares (equity/preference) but does not cover transfer of shares.]


Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to Rs. 10 Lakh  or more in a financial year. 


[This is applicable for a company listed on a stock exchange. It does not cover unlisted companies.]


The following shall apply if the company is liable for Compulsory tax audit u/s 44AB:


Receipt of cash payment exceeding Rs. 2 Lakh  for sale, by any person, of goods or services of any nature


Company

(1) Receipt from any person of an amount aggregating to Rs. 10 Lakh 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).


(2) Receipt from any person of an amount aggregating to Rs. 10 Lakh or more in a financial year for acquiring shares (including share application money) issued by the company. 


[It applies for allotment of shares (equity/preference) but does not cover transfer of shares.]


(3) Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to Rs. 10 Lakh  or more in a financial year. 


[This is applicable for a company listed on a stock exchange. It does not cover unlisted companies.]


(4) Receipt of cash payment exceeding Rs. 2 Lakh  for sale, by any person, of goods or services of any nature.


The following shall apply if the company is liable for Compulsory tax audit u/s 44AB:


Receipt of cash payment exceeding Rs. 2 Lakh  for sale, by any person, of goods or services of any nature

Mutual Funds

Receipt from any person of an amount aggregating to Rs. 10 Lakh  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).

Authorised person under Foreign Exchange Management Act, 1999

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 Rs. 10 Lakh or more during a financial year.

Registrar or Sub-Registrar

Purchase or sale by any person of immovable property for an amount of Rs. 30 Lakh  or more or valued by the stamp valuation authority referred to in section 50C of the Act at Rs. 30 Lakh or more.

Any person who is liable for audit under section 44AB (Like Individuals, HUF, firms, etc.)

Receipt of cash payment exceeding Rs. 2 Lakh  for sale, by any person, of goods or services of any nature 


Rule 114E(1) prescribes a statement of financial transaction  in Form No. 61A. The Form No. 61A has been divided into four parts– 


Part A contains statement level information is common to all transaction types. The other three parts relate to report level information which has to be reported in one of the following parts (depending on the transaction type):


Part B (Person Based Reporting)


Part C (Account Based Reporting)


Part D (Immovable Property Transaction Reporting)




Read the full text of the Press Release dated 18.07.2020 on Part-E of New Form 26AS showing Specified Financial Transactions (SFT)



Government of India

Department of Revenue

Ministry of Finance

Central Board of Direct Taxes 


New Delhi, 18th July. 2020 


PRESS RELEASE


New Form 26AS is the Faceless hand-holding of the Taxpayers


The new Form 26AS is the faceless hand-holding of the taxpayers to e-file their income tax returns quickly and correctly. From this Assessment Year, taxpayers will see an improved Form 26AS which would carry some additional details on taxpayers’ financial transactions as specified in the Statement of Financial Transactions (SFTs) in various categories.


It is stated that the information being received by the Income Tax Department from the filers of these specified SFTs is now being shown in Part E of Form 26AS to facilitate voluntary compliance, tax accountability and ease of e-filing of returns so that the same can be used by the taxpayer to file her or his income tax return (ITR) by calculating the correct tax liability in a feel-good environment. This would also bring in further transparency and accountability in the tax administration.


The earlier Form 26AS used to give information regarding tax deducted at source and tax collected at source relating to a PAN, besides certain additional information including details of other taxes paid, refunds and TDS defaults. But now, it will have SFTs to help the taxpayers recall all their major financial transactions so that they have a ready reckoner to enable them while filing the ITR.


It is further explained that the Department used to receive information like cash deposit/withdrawal from saving bank accounts, sale/purchase of immovable property, time deposits, credit card payments, purchase of shares, debentures, foreign currency, mutual funds, buy back of shares, cash payment for goods and services, etc. under Section 285BA of Income-tax Act, 1961 from “specified persons" like banks, mutual funds, institutions issuing bonds and registrars or sub-registrars etc., with regard to individuals having high-value financial transactions since the Financial Year 2016 onwards. Now, all such information under different SFTs will be shown in the new Form 26AS.


It is stated that the Form 26AS for any taxpayer, from now onwards, will display in part E of the Form, different fields such as, type of transaction, name of SFT filer, date of transaction, single/joint party transaction, number of parties, amount, mode of payment and remarks etc.


Furthermore, this would help the honest taxpayers with updated financial transactions while filing their returns, whereas it will desist those taxpayers who inadvertently conceal financial transactions in their returns. The new Form 26AS would also have information of transactions which used to be received up to Financial Year 2015-16 in the Annual Information Returns (AIR).


(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson. CBDT



Download Copy of Press Release dated 18.07.2020 on Part-E of New Form 26AS showing Specified Financial Transactions (SFT) in pdf format


Also Read: 

CBDT Notifies New Annual Information Statement (AIS) to replace Form 26AS to report TDS, Foreign Tax Credit, and more

Annual Information Statement to replace Form 26AS-Budget 2020



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