SFT also known as Reportable Account, is a system designed by the Income Tax law to monitor high-value transactions made by taxpayers during the year.
Nidhi | May 19, 2025 |
SFT Filing Due Date: Know the Penalties for Non-filing of SFT
Statement of Financial Transaction (SFT), also known as Reportable Account, is a system designed by the Income Tax law to monitor high-value transactions made by taxpayers during the year. Certain businesses or individuals need to file this statement, where they submit the information of the large financial transactions or accounts they have operated during the year.
This information helps the Income Tax Department in tracking the key transactions carried out by the taxpayer. Here are more details about the rules and requirements of SFT.
As per Section 285BA of the Income Tax Act, 1961, some institutions (known as Filers) are required to file a statement of financial transactions (SFT) or reportable accounts to the Income Tax Department or the specified authority. The statement consists of information regarding the specific financial activities or accounts that they have managed during the financial year.
The statement must be submitted on or before May 31, right away following the financial year in which the transaction was recorded. For transactions recorded in FY 2024-25, the SFT must be furnished before May 31, 2025.
The following persons are required to file a Statement of Financial Transaction (SFT) or Reportable Account.
Cash Deposits in a Savings Account
Payment above Rs. 1 lakh in cash or above Rs. 10 lakh in any other mode made to pay the credit card bill is reported by the banking company, cooperative bank or other financial institution on whom the banking regulation is applicable in SFT.
Cash Deposits in a Savings Account
A banking company or cooperative bank on which the banking regulation is enforced must report Cash deposits amounting to Rs. 10 lakh or above in more than one account (excluding the current account and time deposit) in a financial year.
Cash Payment for RBI Prepayment Instruments:
A banking company or cooperative bank governed by the Banking Regulation Act must report cash payments amounting to Rs. 10 lakh or more in a financial year made for the purchase of prepaid instruments issued by the Reserve Bank of India under Section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007).
Cash Deposits in a Current Account
A banking company or cooperative bank to which the banking regulation is applicable must report Cash deposits or cash withdrawals (including through bearer’s cheque) totaling Rs. 50 lakh or more in a financial year, from one or more current accounts of a person.
Sale or Purchase of Immovable Property
Buying and selling made by any person of immovable property for Rs. 30 lakh or above valued by the stamp valuation authority cited in section 50C of the Act at an amount above Rs. 30 lakh must be reported by Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.
Investment in Mutual Funds, shares, Debentures, and Bonds in Cash
Cash purchases exceeding Rs. 10 lakh of Mutual Funds, shares, debentures, and bonds in cash are reported in SFT.
Cash Purchase of Fixed Deposit or Recurring Deposit
Depositing above Rs. 10 lakh in cash in a financial year to invest in Fixed Deposits (FD) or Recurring Deposits (RD) is reported by banks in the Statement of Financial Transactions (SFT) and can attract an Income Tax notice.
Sale And Credit of Forex Card or Sale of Foreign Currency
Receipt of Rs. 10 lakh or more in a financial year from any person for the sale of foreign currency, including credit to a foreign exchange card, or expense in foreign currency via debit or credit card, traveller’s cheque, draft, or any similar instrument can attract an Income Tax notice.
Any person who is liable for audit u/s 44AB of the Act
Receipt of cash payment of more than Rs. 2 lakh for the sale of goods or services of any kind will be reported by any person who is liable for audit under Section 44AB of the Income Tax Act.
A listed company listed for purchasing its own securities u/s 68 of the Companies Act, 2013
Buyback of shares from any person (excluding shares bought on the open market) for an amount or value of Rs. 10 lakh or more in a financial year shall be reported under the Statement of Financial Transactions.
If you do not file the statement of financial transaction or reportable account, you will have to pay a penalty under section 271FA. Penalty amount can be Rs. 500 per day of default.
However, under Section 285BA(5), tax authorities may send a notice instructing the person to file the statement within 30 days from the date of service of the notice. If the person fails to do so, a higher penalty of Rs. 1,000 per day is imposed, starting from the day after the deadline expires.
Made Mistake in SFT Report! What to Do?
Person filing the SFT finds the Mistake:
Suppose any person, after filing the statement, comes to know or discovers any inaccuracy in the information provided in the statement. In that case, he shall inform such inaccuracy to the prescribed income- tax authority within a period of ten days and furnish the correct information.
Income Tax Authority finds the mistake:
On the other hand, the prescribed income-tax authority may also intimate the defect to the person and give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or within such extended period as may be allowed by prescribed income-tax authority.
What if the defect is not corrected?
If a person fails to rectify the defect in the statement, it shall be deemed as such person had furnished inaccurate information in the statement.
Penalty of Rs. 50000 is applicable:
The prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees.
Penalty of Rs. 5,000 is applicable:
A penalty of Rs. 5,000 would be levied on reporting financial institution if there is any inaccuracy in SFT and such inaccuracy is due to false or inaccurate information submitted by the holder of reportable accounts. The reporting financial institution may also recover such penalty amount from the holder of the reportable account.
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