UNDERSTANDING STATEMENT OF FINANCIAL TRANSACTION (SFT)

Power of social media, Now to keep a watch on high value transactions undertaken by the taxpayer, the Income-tax Law has framed the concept of statement of financial transaction or reportable account. Statement of Financial Transaction – SFT consists of certain specified financial high-value transactions undertaken by citizens that the Government proposes to track, with an intent to curb black money and widen the tax base in India. The Government of India requires certain specified persons and entities to report high-value transactions undertaken by citizens to the Income Tax department. Such specified persons were required to submit ‘Annual Information Return (AIR)’ introduced in 2003 with respect to specified financial transactions under Section 285BA.

There are various returns and sources from which the department is getting the information of high value transactions. The major source of this information are

Statement of Financial Transactions (SFT)

Tax Deduction at Source (TDS)

Tax Collection at Source (TCS)

Foreign Remittances (Form 15CCB) etc.

Data from the GST returns filed by the taxpayers

SFT as referred above provides the data of Property transactions, Mutual Fund investments, Shares investment, credit card transactions, cash deposits/ withdrawals from bank, etc

The income-tax department has started to reach out to certain taxpayers who have either not filed income-tax returns (ITR) or failed to accurately report high-value transactions in their returns. Objective of the e-campaign is to facilitate taxpayers to validate their financial transaction information against information available with the IT department and promote voluntary compliance, especially for the assessee for the FY 2019-2020 (AY 2020-21) so that they do not need to get into notice and scrutiny process. Department has started sending SMS & Emails to such taxpayers about e-campaign on High Value Transactions on Compliance Portal.

The mail forwarded by the department provides the reasons for issue of the notice and the mode of responding to the notice as well. The mail is on the following line:

Have you received this communication?

We appreciate that you have filed your Income Tax Return and contributed towards the progress of Nation. However, the Income Tax Department has received information on high value transactions relating to XXXXX1111X for Financial Year 2019-20. On the basis of data analysis, the Income Tax Department has identified following high value information which does not appear to be in line with the Income Tax Return filed for Assessment Year 2020-21

What steps should you take?

LOGIN Compliance portal

VIEW Information Details

UPLOAD Return

Login to the e-filing portal (https://incometaxindiaefiling.

gov.in) and click on the ‘Compliance Portal’ link available in ‘My Account’ to navigate to Compliance portal (https://compliance.insight.gov.in) Click on the ‘e-Campaign – High Value Transactions‘ tab to view information details. Please submit online response by selecting among the following options on Compliance Portal:

· Information is correct

· Information is not fully correct

· Information related to other Person/ Year

· Information is duplicate/ included in other displayed information

· Information is denied

Option A: Information is correct

This option should be selected if the information belongs to the Taxpayer and all the attributes of the Information are correct.

Option B: Information is not fully correct

This option should be selected if the information belongs to the Taxpayer but all the attributes of the Information are not correct. Upon selecting this option, relevant information fields will be displayed to the taxpayer and taxpayer will be able to update correct information details. e.g.- Account number, Information value, etc.

Option C: Information relates to other person/year

This option should be selected if the Taxpayer is aware of the Information, but it belongs to other person or year e.g. such instances may arise due to joint ownership of property or joint holding of accounts or other assets. The taxpayer will be able to provide correct and complete information of other person(s) to whom the Information pertains (i.e. PAN, relationship, FY etc).

Option D: Information is duplicate/included in other displayed information

This option should be selected if the information displayed is already included in any other information or it may be a duplicate information. Taxpayer needs to select the duplicate Information and click on submit button.

Option E: Information is denied

This option should be selected if the Taxpayer completely denies the information displayed.

Accumulation of black money has been one of the major threats to the Indian economy. The government of India along with the ministry of finance has been striving towards curbing black money and also widening the tax base and has taken numerous initiatives in this regard. One such initiative was to cast an obligation on government agencies and other authorities who are a valuable and reliable source of information, to report high-value transactions. Such specified persons were required to submit ‘Annual Information Return (AIR)’ introduced in 2003 with respect to specified financial transactions under Section 285BA.