Statement of Financial Transactions (SFT): Tax Compliance in India
Budget 2025- Expectations
January 31, 2025Accurate reporting is not just a duty, but a commitment to uphold the integrity of the financial system.
📌 What is SFT?
The Statement of Financial Transactions (SFT) is a crucial compliance measure introduced by the Income Tax Department of India under Section 285BA of the Income-tax Act, 1961. It requires specified entities to report high-value transactions that could potentially indicate unreported income.
This data is compiled to detect tax evasion, enhance transparency, and assist in pre-filling your Annual Information Statement (AIS) and Income Tax Return (ITR).
📌 Who Must File SFT and Reporting?
As per Rule 114E of the Income Tax Rules, 1962, certain entities are required to submit details of specific high-value transactions in Form 61A through the Income Tax e-Filing portal.
Here’s a comprehensive list of who must file and the transaction limits that trigger reporting:
| Reporting Entity / Person | Transaction Type | Threshold Limit |
| Banks, Co-operative Banks, Post Offices | Cash deposits in one or more savings accounts | ₹10 lakhs or more per financial year |
| Banks, Co-operative Banks, Post Offices | Cash withdrawals from one or more current accounts | ₹50 lakhs or more per financial year |
| Banks, NBFCs, Co-op Banks, Post Offices | Time deposits (excluding renewals) | ₹10 lakhs or more |
| Credit Card Issuers | Credit card bill payments (cash) | ₹1 lakh or more |
| Credit Card Issuers | Credit card bill payments (non-cash) | ₹10 lakhs or more |
| Companies issuing shares | Receipt for share issuance or buyback | ₹10 lakhs or more |
| Companies issuing bonds or debentures | Receipt from any person | ₹10 lakhs or more |
| Mutual Fund Trustees | Receipt for acquiring mutual fund units | ₹10 lakhs or more |
| Authorized Dealers under FEMA | Sale of foreign currency or foreign travel expenses | ₹10 lakhs or more |
| Registrar or Sub-Registrar (under Registration Act, 1908) | Purchase/sale of immovable property | ₹30 lakhs or more |
| Persons liable for audit under Sec 44AB (e.g., Traders) | Cash receipt from sale of goods/services | ₹2 lakhs or more |
| Depositories, Stock Exchanges, RTAs | Capital gains, dividends, interest on securities, etc. | As per prescribed reporting rules |
| Banks & Financial Institutions | Payment of interest | Report if PAN is not furnished |
📌 Due Date for Filing SFT
The SFT must be filed annually in on or before 31st May of the financial year immediately following the year of transaction.
For example: For transactions in FY 2024-25 → the due date is 31st May 2025.
⚠️ Penalties for Non-Compliance
Non-filing or delayed filing of SFT attracts strict penalties under Section 271FA:
- ₹500 per day – For initial delay beyond the due date
- ₹1,000 per day – If default continues after notice by the department
- ₹50,000 – For incorrect or incomplete reporting not rectified within 10 days of notice
👥 Why SFT Matters for Taxpayers
Even though SFT filing is the responsibility of reporting entities, taxpayers must be aware because:
- These transactions are automatically reflected in your Annual Information Statement (AIS)
- They help in pre-filling ITRs and reducing the chances of errors
- Unmatched or unreported entries may lead to income tax notices or scrutiny
Always review your AIS before filing your ITR to ensure consistency.
Income Tax | SFT | Form 61A | High-Value Transactions | AIS | Tax Compliance India | Reporting Entities
