Income Tax Department Flags Common Errors in SFT Filings by Banks

The Income Tax Department has flagged several recurring errors in Statement of Financial Transactions (SFT) filings made by banks, mutual funds and other reporting entities, cautioning that such mistakes may lead to inconvenience and confusion for taxpayers while filing income tax returns.

Under the Income Tax Act, specified reporting entities are required to furnish details of prescribed financial transactions and reportable accounts through SFT filings to the tax authorities. The due date for filing SFTs for FY 2025-26 is May 31, 2026.

According to officials, the department’s analysis of SFT filings has revealed common issues including incorrect or missing PAN details, duplicate reporting of transactions, inaccurate transaction values, and discrepancies in reporting joint account transactions.

Officials noted that errors in SFT filings often result in incorrect reflection of financial information in taxpayers’ Annual Information Statements (AIS).

The reporting framework applies to a wide range of entities including banks, NBFCs, mutual fund trustees, post offices, forex dealers, sub-registrars, issuers of bonds and debentures, and companies undertaking dividend payments or share buybacks.

The department stated that information furnished through SFT filings is integrated into the taxpayer’s Annual Information Statement available on the Income Tax portal. The AIS captures details relating to interest income, dividend receipts, securities transactions, mutual fund investments, property transactions and other specified financial dealings linked to the taxpayer’s PAN.

Officials emphasised that incorrect reporting may adversely impact taxpayers during return filing and verification processes. To minimise such issues, reporting entities have been advised to validate PAN details before submission, reconcile transaction data internally, ensure timely filing, and undertake periodic quality checks before uploading SFT data.

The department advised reporting entities to strengthen internal verification mechanisms to ensure accurate PAN mapping and avoid duplicate or erroneous transaction reporting.

According to officials, accurate SFT reporting enhances transparency, facilitates smoother tax compliance, and helps taxpayers file more accurate income tax returns by enabling proper verification of financial information reflected in the AIS.