Mutual Fund Transactions to Feed ITR Pre-Filling: CBDT Prescribes Half-Yearly SFT Reporting:

The Central Board of Direct Taxes (CBDT) has notified detailed guidelines for submission of Statement of Financial Transactions (SFT) in respect of Mutual Fund transactions by Registrar and Share Transfer Agents (RTAs).

Section 508 of the Income Tax Act, 2025 read with Rule 237 of the Income Tax Rules, 2026 requires specified reporting persons to furnish SFTs. Rule 237(6) specifically provides for reporting information relating to capital gains arising from transfer of units of Mutual Funds in the prescribed manner. The DGIT (Systems), with the approval of the Board, has accordingly prescribed the format, procedure and data structure for such reporting.

All RTAs registered under Section 12(1) of the Securities and Exchange Board of India Act, 1992 are required to prepare the prescribed data files from their internal systems and submit them through the SFTP server using the login credentials communicated separately. A separate control statement is also required to be signed, verified and furnished by the Designated Director.

The SFT is required to be furnished on a half-yearly basis. The statement for the first half of the financial year ending September 30 is to be furnished on or before October 31, while the statement for the second half ending March 31 is to be furnished on or before April 30. Reporting entities must also provide the reported Mutual Fund transaction information to account holders so that taxpayers can reconcile the data appearing in their Annual Information Statement (AIS).

The Mutual Fund transaction summary will be used for pre-filling gains, income and losses arising from Mutual Fund transactions. The guidelines prescribe reporting of user-initiated debit transactions, while information relating to transfers between the same person as transferor and transferee need not be furnished. Data relating to exchange-traded funds and exchange-based transactions may also be excluded.

For determining the nature of the capital asset, securities are required to be classified into the prescribed security classes. The First-in-First-out (FIFO) method is to be used for identifying corresponding purchases and determining the holding period. Units of equity-oriented mutual funds and UTI mutual funds generally carry a minimum holding period of 12 months, while other units carry a holding period of 12 months if listed and 24 months if unlisted, subject to the specific treatment prescribed for specified mutual funds under Section 76 of the Income-tax Act, 2025.

The reporting framework requires RTAs to furnish separate files containing Mutual Fund batch details, account summaries, transaction summaries and off-market transaction details. The account summary includes information such as PAN, client name, client status, opening value, purchase value, transaction charges, stamp duty, sale value, dividend paid and closing value.

Accordingly, the CBDT has established a structured reporting mechanism for Mutual Fund transactions to facilitate accurate reporting of capital gains and other transaction information and enable greater accuracy in pre-filled income-tax returns and Annual Information Statements.

For Full Information, refer to the Official Notification provided