Income tax

Form 61A: What You Need to Know About Statement of Specified Financial Transactions

Form 61A is a statement of specified financial transactions (SFTs) under Section 285BA of the Income Tax Act, 1961. It is used to capture information on certain high-value transactions as prescribed in the Income Tax Act. This blog post covers the details of Form 61A, the transactions that should be reported, the format of the form, and the consequences of non-compliance.

Introduction

The Income Tax Law has established the concept of the Statement of Specified Financial Transactions (SFTs) or reportable account to keep a record of the high-value transactions executed by the taxpayers. Using SFTs, the Income Tax Department will capture the information on certain high-value transactions as prescribed in the Section 285BA of the Income Tax Act, 1961.

Section 285BA

As per Section 285BA, read with Rule 114E, of the Income Tax Act, 1961, specified entities must provide details of Specified Financial Transactions (SFTs) or any reportable account registered/ recorded/ maintained by them during the financial year. The information is provided in Form 61A which contains various parts for capturing information related to SFT. All high-value transactions are captured through Form 61A enabling the Income Tax Department to keep a track of the same.

Transactions Required to be Reported under SFT

The following transactions should be reported under Form 61A:

Class of Person	Nature and Type of Transaction	Aggregate Minimum Value of Transaction in a Financial Year
Banking Company or Co-operative Bank or Postmaster General/ Non-Banking Financial Company (NBFC)/Nidhi Company	Cash deposits or cash withdrawals (which includes bearer’s cheque) aggregating to INR 50 Lakh or more in a financial year, in or from one or more current account of a person.	INR 50 Lakh
	Purchase of bank drafts or pre-paid financial instruments.	INR 10 Lakh
	One or more time deposits made by a person.	INR 10 Lakh
	Cash deposit by a person (not including current accounts and time deposits).	INR 10 Lakh
	Making the payment of a credit card.	INR 1 Lakh (in cash) INR 10 Lakh (in any mode other than cash)
A company or institution issuing Bond or Debenture or Shares	Receipt of share application money from any person of an amount for acquiring shares. Receipt of money from any person for acquiring bonds or debentures. Other than the money received on account of renewal of bond or debenture.	INR 10 Lakh
A company listed on a recognized Stock Exchange	Buying back shares from any person other than from the open market.	INR 10 Lakh
A trustee of the mutual fund	Receipt from any person for acquiring units of one or more schemes of the mutual funds.	INR 10 Lakh
Authorized person under the Foreign Exchange Management Act (FEMA)	Receipt from any person for sale of foreign currency.	INR 10 Lakh
Registrar or Sub-Registrar or Inspector General appointed under the Registration Act, 1908	Purchase or sale of immovable property, valued as per stamp valuation authority.	INR 10 Lakh
Any person liable for audit under Section 44AB of the Income Tax Act, 1961	Receipt of cash payment for sale of goods or services of any type, other than those mentioned above.	INR 2 Lakh

Format of SFT

Form 61A is divided into different parts namely:

Part A: It seeks statement related details and is common for all types of transactions. Information such as: Reporting entity details, statement details, and principal office details are required under this section.
Part B: Report details for aggregated financial transactions. It is a person-based reporting. Information such as: Report number, person details, financial transaction summary, and financial transaction details are required under this section.
Part C: Report details for bank or post office account. It is an account-based reporting. Information such as: Report number, account details, account summary, and person details are required under this section.
Part D: Report details for immovable property transactions. It is a transaction-based reporting. Information such as: Report number, transaction details, and person details are required under this section.

Conclusion

Form 61A is a crucial document for reporting specified financial transactions under the Income Tax Act, 1961. It is essential for specified entities to provide accurate and timely information to the Income Tax Department to avoid any penal consequences.

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Krishna Gopal Varshney

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