Under Section 285BA of the Income Tax Act of 1961, Form 61A—known as the Statement of Financial Transactions (SFT)—is prescribed. Banks, post offices, mutual funds, non-banking financial institutions (NBFCs), and property registrars—among other reportable reporting entities— must submit information of high-value financial transactions in this format. Transactions conducted by a person or business throughout a fiscal year. Form 61A aims to enable the Income Tax Department to monitor significant transactions, deter tax evasion, and promote financial transparency. Every year, it must be submitted in a certain format on or before May 31st of the following year.
Applicability of Form 61A
Companies employing Form 61A—Statement of Financial Transactions—report significant transactions to the Income Tax Department. Form 61A can be used by institutions managing high-value financial transactions, thereby ensuring improved tax compliance and transparency.
It is used in the following cases:
- Banks (including co-operative banks) have to report large deposits, withdrawals, fixed deposits, and credit card payments.
- Post Offices are required to report savings account deposits, fixed deposits, and cash transactions.
- NBFCs and Nidhi Companies are required to report specified deposits and investments.
- Companies and Mutual Funds: Must report high-value share offers, buybacks, debentures, bonds, and investments.
- Sub-Registrars are responsible for reporting the sale and purchase of immovable property worth ₹30 lakh or more.
- Money Changers/Authorised Dealers: Are required to report foreign exchange transactions of ₹10 lakh or more.
- Notified individuals are required to record high-value cash receipts of ₹2 lakh or more for sale of goods or services.
What are Specified Financial Transactions for Form 61A?
In India, banks, NBFCs, mutual funds, or registrars appointed under Section 285BA of the Income Tax Act, 1961, are required to offer to the Income Tax Department. Large financial transactions conducted by businesses or individuals are checked so the department can monitor these events and stop tax evasion.
For cash-heavy-oriented and high-value and high-risk transactions like significant cash deposits and withdrawals, fixed deposits, credit card payments, the Form 61A transactions in foreign currency, securities purchases, real estate purchases, and excessive amounts.
1. Bank and Post Office Cash Transactions
- Deposits of ₹10 lakh or more in a person’s savings accounts in a financial year.
- Aggregate deposits or withdrawals of ₹50 lakh or above in an individual’s current accounts during a financial year.
- Cash deposits of ₹10 lakh or above in any account other than current accounts and time deposits.
2. Time Deposits (fixed deposits)
Fixed deposits of ₹10 lakh or above received during a financial year with:
- Banks (including co-operative banks)
- Post offices
- Nidhi companies
- NBFCs
- Other specified institutions.
3. Credit Card Payments
Payment by credit cards held by individuals:
- Cash payments of ₹1 lakh or more in a financial year.
- Other modes of payment (cheque, online, etc.) of ₹10 lakh or more in a fiscal year.
4. Purchase or Sale of Immovable Property
The sub-registrar or registrar of property has to report:
- Acquisition or disposal of immovable property worth ₹30 lakh or above.
- Even if the transaction value actually done is less than that, if the stamp duty value is ₹30 lakh or above, it has to be reported.
5. Purchase of Shares, Debentures, Bonds, and Mutual Funds
Companies, institutions, and mutual funds have to report:
- Purchase of shares (including application monies for shares) aggregating ₹10 lakh or more during a financial year.
- A listed company can buy back shares from an individual for ₹10 lakh or more.
- Purchase of debentures/bonds aggregating ₹10 lakh or more issued by a company or organisation.
- Purchase of units of a mutual fund for ₹10 lakh or more, other than transfers/redemptions between schemes.
6. Foreign Exchange Transactions
- The authorised dealers, banks, and forex dealers have to report the receipts for the purchase of foreign exchange for ₹10 lakh or more in a financial year.
- This includes forex cards, demand drafts, travellers’ cheques, etc.
7. Repurchase of Securities
Listed companies are required to report share repurchases of ₹10 lakh or higher from shareholders in a fiscal year.
8. Other Notified High-Value Transactions
- The seller has been reported to have received cash exceeding ₹2 lakh as payment for selling goods or services.
- Some cooperative banks, non-banking financial institutions (NBFCs), and post offices are required to report high-value cash transactions, such as deposits, withdrawals, and purchases.
Process of Filing Form 61A
Form 61A is filed electronically using the Income Tax Department’s reporting system in a particular format. The procedure involves multiple steps to verify that all prescribed financial transactions are correctly reported.
1. Data Preparation
- Reporting entities (including banks, mutual funds, registrars, and NBFCs) have to collect, validate, and structure transaction information as per Rule 114E guidelines.
- The required structure is Form 61A Schema (XML/ITDREIN), which covers information such as the transaction type, customer PAN, transaction amount, and date.
2. Enrol as a Reporting Entity
Enrol on the Reporting Portal (https://report.insight.gov.in) through your PAN to receive an ITDREIN (Income Tax Department Reporting Entity Identification Number).
3. Prepare and Validate the File
- Prepare the SFT statement in XML format.
- Verify it using the Income Tax Department’s Validation Utility Tool. The verified file is then zipped to a ZIP file and digitally signed using a Class II/III DSC.
4. File Upload
- Upload the signed file to the reporting portal.
- If successfully uploaded, an Acknowledgement Number is provided as evidence of submission.
5. Corrections and Resubmissions
- When errors are found, a correction statement needs to be filed.
- Companies have to file by May 31 of the next fiscal year.
Fees and Due Date of Form 61A
Filing Form 61A, the Statement of Financial Transactions, with the Income Tax Department is free of charge. Penalties are assessed, though, if the statement is not filed properly or within the deadline.
Filing Form 61A is due on May 31st of the next fiscal year from the close of the transaction’s year. For transactions in FY 2024–25, for instance, the return must be submitted by May 31, 2025, at the most.
The Income Tax Department could issue a notice if the statement is not submitted by the deadline. Should a reporting entity not submit Form 61A within 30 days of notice, they could be subject to fines specified under Section 271FA: ₹500 a day for delay and ₹1,000 a day after notification.
Filing Nil Return (Nil Form 61A)
There are times when a reporting entity might not have any reported financial transactions (SFTs) to report for a fiscal year. In these situations, compliance is still important by filing a Nil Statement on Form 61A.
1. Applicability
- All reporting entities, viz., banks, NBFCs, post offices, mutual funds, and registrars, are to file Form 61A on a yearly basis.
- In the event that there are no reportable transactions, they should file a ‘Nil Statement’ instead of not filing.
2. Purpose
- Filing a Nil Form 61A notifies the Income Tax Department that the organisation has examined its records and determined that no transactions above the statutory limits have been made over the year.
- This step will prevent unnecessary notices and compliance monitoring.
3. Procedure
- Log in to the Income Tax Reporting Portal (https://report.insight.gov.in) using ITDREIN credentials.
- Choose the option of filing a ‘Nil Statement’.
- Make a simple declaration online instead of making an XML file.
- An acknowledgement number will be produced as evidence of submission.
4. Due Date: Nil statement needs to be filed by May 31st of the following financial year.
5. Consequences of Non-Filing: Non-filing can result in penalties under Section 271FA for non-compliance despite the absence of transactions.
6. Best Practice: Filing Nil Form 61A is a compliance measure that guarantees the records of the entity are current with the Income Tax Department.
Consequences of Non-Compliance with Form 61A
Failure to file, late filing, or improper filing of Form 61A attracts heavy penalties as prescribed under the Act.
1. Penalty for Late or Non-Filing
- According to Section 271FA, if Form 61A is not submitted within the due date (May 31st), a penalty of ₹500 per day will be imposed.
- In case of failure to file after receiving a notice from the Income Tax Department, a fine of ₹1,000 per day will be levied from the date of notice.
2. Penalty for Wrong Information: Under Section 271FAA, in case Form 61A is furnished with inaccurate information and the entity was conscious (or ought to have been conscious) of this fact, a fine of ₹50,000 can be levied.
3. Scrutiny of Compliance: Ongoing noncompliance can result in heightened enforcement, audits, or regulatory action against the reporting entity.
Conclusion
The basic purpose of Form 61A (Statement of Financial Transactions) is to build an open financial reporting system that can detect high-value transactions in banking, securities, real estate, and other sectors. By making reporting entities report information about specific transactions, the Income Tax Department can streamline tracking unreported income, reduce tax evasion, and enforce compliance with legal norms. The purpose goes beyond simple regulation; it aims to build a culture of fiscal prudence as well. Thus, the timely and accurate filing of Form 61A is necessary for improving India’s tax administration and supporting a fair and transparent economic system.
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