Karnataka Makes it Mandatory to Submit SFT in Transactions of High-Value Property

In a bid to boost tax compliance and avert evasion, the Karnataka Stamps and Registration Department has come out with a circular making it mandatory for all the sub-registrars in the state to obtain the Specified Financial Transaction (SFT) statement at the time of registration of property transactions involving more than Rs. 30 lakhs.

This circular is in line with Section 285BA(1) of the Income Tax Act, 1961, which requires high-value transactions to be reported to the Income Tax Department. The circular was prompted by a concern expressed by the Income Tax authorities that there were a number of instances where sub-registrars did not report these important reports.

As per the circular instructions, the sub-registrars are required to collect detailed information from both the buyer and the seller in a specific format. It involves PAN card information, Aadhaar numbers, addresses, date of birth, amount of transaction, specification of property, payment mode, receipt of Form 60 if any, in addition to contact numbers and email addresses. Such information needs to be attested and signed by both parties, and the filled-in SFT form is to be scanned and uploaded along with the rest of the registration documents.

In order to enforce stringent compliance, sub-registrars have been instructed not to release documents of registered property unless the SFT form is submitted. The circular also makes them responsible for any procedural shortcomings.

Though sub-registrars have reportedly been filing SFT returns on a regular basis, they have now got formal directions through this circular for the first time. Some officials were earlier subjected to disciplinary action because of laxity, usually resulting from excessive workload.

Sub-registrars have also requested the authorities to introduce SFT submission into the current Kaveri-2.0 software platform employed to upload registration documents. They proposed that the provision of self-declaration and uploading of SFT details by the parties themselves would minimize manual work and make the process more efficient for both the department and the Income Tax authorities.

This new initiative emphasizes the government’s continued efforts to fortify property transaction transparency and ensure on-time, proper reporting of taxes.