Taxation

Statement of financial transaction under Income tax and filling due date

[tags AIR,285BA, 114E, From 61A, Income Tax Act, 1961]

To keep a watch on high value transactions undertaken by the taxpayer, the Income-tax Law has framed the concept of statement of financial transaction or reportable account (previously called as ‘Annual Information Return (AIR)’.With the help of the statement the tax authorities will collect information on certain prescribed high value transactions undertaken by a person during the year. Statement of financial transaction or reportable account is to be filed by certain prescribed entities.

As per Section 285BA of the Income Tax Act, 1961 (as substituted by Finance Act, 2014 w.e.f 01-04-2015), specified entities (Filers) are required to furnish a statement of financial transaction

Persons required to file statement of financial transaction or reportable account

Following persons shall be required to furnish statement of financial transactions or reportable accounts registered or recorded or maintained by them during a financial year to the prescribed authority:

a) an assessee;

b) the prescribed person in the case of an office of Government;

c) a local authority or other public body or association;

d) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908 (16 of 1908);

e) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988);

f) the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898);

g) the Collector referred to in clause (g) of section 3 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013);

h) the recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

i) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);

j) a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996); or

k) a prescribed reporting financial institutions

Transactions that are required to be reported

Sr.No.Nature and value of transactionClass of person (reporting person)
1(a) 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.
(b) 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.
(c) 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.
A banking company or a ooperative bank
2Cash 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.
(i) A banking company or a cooperative bank
(ii) Post Master General
3One 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.(i) A banking company or a cooperative bank
(ii) Post Master General
(iii) Nidhi Company
(iv) Non-banking financial company
4Payments 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.
A banking company or a ooperative bank or any other ompany or institution issuing credit card.
5Receipt 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).A company or institution issuing bonds or debentures.
6Receipt 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 companyA company issuing shares.
7Buy 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.A company listed on a recognised stock exchange purchasing its own securities under section 68 of the Companies Act, 2013
8Receipt 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).A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund
9Receipt 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 travelers cheque or draft or any other instrument of an amount aggregating to Rs. 10 lakh or more during a financial yearAuthorised person under Foreign Exchange Management Act, 1999
10Purchase or sale by any person of immovable
property for an amount of Rs. 10 lakh or more or
valued by the stamp valuation authority referred to
in section 50C of the Act at Rs. 30 lakh or more
Inspector-General or Registrar or Sub-Registrar appointed under the Registration Act, 1908
11Receipt of cash payment exceeding Rs. 2 lakh 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
12Cash deposits during the period 9thNovember, 2016 to 30thDecember, 2016 aggregating to—
(i) Rs. 12,50,000 or more, in one or more current account of a person; or
(ii) Rs. 2,50,000 or more, in one or more accounts (other than a current account) of a person.
(i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 applies
(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898
13Cash deposits during the period 1stof April, 2016 to 9th November, 2016 in respect of accounts that are reportable under SI.No.12 because cash deposited in this account between 9th November, 2016 to 30th December, 2016 aggregating to—
(i) Rs. 12,50,000 or more, in one or more current account of a person; or
(ii) Rs. 2,50,000 or more, in one or more accounts (other than a current account) of a person.
(i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 applies
(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898

The periodicity and due date of furnishing statement of financial transaction or reportable account

The statement of financial transaction shall be furnished electronically (under digital signature) in Form No. 61A to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation). However a Post Master General or a Registrar or an Inspector General may furnish Form No. 61A in a computer readable media being a Compact Disc or Digital Video Disc (DVD), alongwith the verification in Form-V on paper.

Further, the statement shall be furnished on or before 31st May immediately following the financial year in which the transaction is registered or recorded.

However, the statement of financial transaction in respect of the transactions listed at serial number (12) and serial number (13) in the Table given above, shall be furnished on or before the 31st day of January, 2017. Section 285BA(5) empower the tax authorities to issue a notice to the person who had not filed the statement within due date. In such a case, the tax authorities may serve upon such person a notice requiring him to furnish the statement within a period not exceeding 30 days from the date of service of such notice and in such a case the person shall furnish the statement within the time as specified in the notice.

Consequences of not furnishing statement of financial transaction or reportable account

Non-furnishing of statement of financial transaction or reportable account will attract penalty under section 271FA. Penalty can be levied of Rs. 500 per day of default.

However, section 285BA(5) (as discussed earlier) empower the tax authorities to issue a notice to the person directing him to file the statement within a period not exceeding 30 days from the date of service of such notice and in such a case person shall furnish the statement within the time specified in the notice. If person fails to file the statement within the specified time, then a penalty of Rs. 1,000 per day will be levied from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.

Consequences of filing inaccurate or defective statement of financial transaction or reportable account

As per section 271FAA of the Income-tax Act, if a prescribed reporting financial institution referred to in Section 285BA(1)(k) who is required to furnish statement of financial transactionor reportable account, provides inaccurate information in the statement, and where:

(a) the inaccuracy is due to a failure to comply with the due diligence requirement as prescribed under rule 114H of the Income-tax Rules, 1962 or is deliberate on the part of that person;

(b) the person knows of the inaccuracy at the time of furnishing the statement but does not inform the prescribed income-tax authority or such other authority or agency;

(c) the person discovers the inaccuracy after the statement is furnished and fails to inform and furnish correct information within a period of 10 days as specified under section 285BA(6),

then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees.

Filling NIL return by assesse where NO specified transaction during the period

It is advised to fill NIL return even if there is no specified transaction as there is no clarity from the department about the same, although it has not mandate the same in any provision where no specified transaction has taken place during the

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