To keep a watch on high value transactions undertaken by the taxpayer, the Income-tax Law has framed the new concept of furnishing of “Statement of financial Transactions” in Form No 61A (previously called as ‘Annual Information Return (AIR)’. With the help of the statement the tax authorities will collect information on certain prescribed high value transactions undertaken by a person during the year.
Statement of ‘high value financial transactions‘ is required to be furnished under section 285BA of the Income-tax Act, 1961 by ‘specified persons‘ in respect of ‘specified transactions‘ registered or recorded by them during the financial year.
The ‘specified persons’ and the ‘specified transactions’ are listed in new Rule 114E of the Income-tax Rules, 1962.
New Rule 114E of the income tax rules requires all assessees liable for tax audit u/s 44AB will have to file statement of financial transactions in Form 61A, in case of receipt of cash payment exceeding of Rs. 2,00,000/- for sale of goods/services of any nature.
Who is required to file Statement of financial Transactions?
As per new rule following persons shall be required to furnish statement of financial transactions or reportable accounts registered or recorded or maintained by them during a financial year to the prescribed authority on or after 1st day of April, 2016.
- Any person who is liable for audit under section 44AB of the Act
- Banking Company
- Co-operative Bank
- Post Master General of Post office
- Nidhi referred to in sec 406 of the Companies Act 2013
- Non-banking Financial Company (NBFC)
- Any Institution issuing Credit Card
- Company or Institution issuing bonds or debentures
- Company issuing shares
- Trustee of a Mutual Fund
- Authorized Dealer, Money Changer, Off-shore Banking Unit or any other person defined in FEMA, 1999
- Inspector-General or Sub-Registrar appointed under Registration Act, 1908
Nature and values of transactions covered under filing statement of financial Transactions:
The statement of financial Transactions shall be furnished by every person mentioned in column (3) of the below Table in respect of all transactions of the nature and value specified in the corresponding entry in column (2) of the said Table which are registered or recorded by him on or after 1-04-2016
|Sl No||Nature and value of Transactions||Class of Person|
|1||Payment of cash aggregating Rs. 10,00,000 or more in a year for purchase of DD, Pay Orders, Bankers Cheque.||• A Banking Company, • Co-operative Bank|
|2||Payment made in cash aggregating to Rs. 10,00,000 or more in a year for purchase of pre-paid instruments issued by RBI||• A Banking Company, • Co-operative Bank|
|3||A cash deposit aggregating to Rs. 10,00,000 or more in a year in one or more bank accounts (other than current account or time deposit)||• A Banking Company, • Co-operative Bank, • Post Master General of Post office|
|4||A Cash deposit aggregating to Rs. 50,00,000 or more in a year in one or more current account of a person||• A Banking Company, • Co-operative Bank|
|5||A Cash withdrawal aggregating to Rs. 50,00,000 or more in a year from one or more current account of a person||• A Banking Company, • Co-operative Bank|
|6||One or more time deposit (other than renewal) aggregating to Rs. 10,00,000 or more of a person||• A Banking Company, • Co-operative Bank, • Post Master General of Post office, • Nidhi referred to in sec 406 of the Companies Act 2013|
|7||Credit card payment made by any person aggregating to Rs. 1,00,000 or more in a year in cash or Rs. 10,00,000 or more by any other mode||• A Banking Company, • Co-operative Bank, • Any Institution issuing Credit Card|
|8||Receipt from any person of an amount agregating to Rs.10,00,000 or more for acquiring bonds or debentures issued.||• Company or Institution issuing bonds or debentures|
|9||Receipt from any person of an amount aggregating to Rs. 10,00,000 or more in a year for acquiring shares issued by the company (including share application money)||• Company issuing shares|
|10||Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to Rs. 10,00,000 or more in a year.||• A company listed on a recognised stock exchange|
|11||Receipt of an amount aggregating Rs. 10,00,000 or more for acquiring units of one or more schemes of a Mutual Fund. (other than switching of funds from one scheme to another)||•Trustee of a Mutual Fund|
|12||Receipt from any person for sale of foreign currency or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument of an amount aggregating to Rs. 10,00,000 or more in a year||Authorized Dealer, Money Changer, Off-shore Banking Unit or any other person defined in FEMA, 1999|
|13||Purchase or sale by any person of immovable property for an amount of Rs. 30,00,000 or more or valued by the stamp valuation authority referred to in section 50C of the Act at Rs. 30,00,000 or more.||Inspector-General or Sub-Registrar appointed under Registration Act, 1908|
|14||Receipt of cash payment exceeding Rs. 2,00,000 for sale of goods or providing services of any nature other than those specified above||Any person who is liable for audit under section 44AB of the Act|
The periodicity and due date of furnishing statement of financial transaction:
The statement of financial transactions (online return in Form No. 61A with digital signature) shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded.
However, section 285BA(5) empower the tax authorities to issue a notice to the person who had not filed the statement within prescribed time. In such a case, the tax authorities may serve upon such person a notice requiring him to furnish the statement within a period not exceeding 30 days from the date of service of such notice and in such a case the person shall furnish the statement within the time as specified in the notice.
Consequences of not furnishing statement of financial transactions:
Non-furnishing of statement of financial transaction or reportable account will attract penalty under section 271FA. Penalty can be levied of Rs. 100 per day of default. However, section 285BA(5) empower the tax authorities to issue a notice to the person directing him to file the statement within a period not exceeding 30 days from the date of service of such notice and in such a case person shall furnish the statement within the time specified in the notice.
If person fails to file the statement within the specified time, then a penalty of Rs. 500 per day will be levied from the day immediately following the day on which the time specified in such notice for furnishing the statement expires
Failure to correct Inaccurate or defective statement of financial transaction or reportable account filed.
If any person, after filing the statement, comes to know or discovers any inaccuracy in the information provided in the statement, he shall inform such inaccuracy to the prescribed income-tax authority within a period of ten days and furnish the correct information in such manner as may be prescribed.
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.
However, if a person fails to rectify the defect within the said period than such statement shall be treated as an invalid statement and the provisions of this Act shall apply as if such person had failed to furnish the statement.
Consequences of filing inaccurate or defective statement of financial transaction or reportable account:
As per section 271FAA of the Income-tax Act, if a prescribed reporting financial institution referred to in Section 285BA(1)(k) who is required to furnish statement of financial transaction or reportable account, provides inaccurate information in the statement, and where:
(a) the inaccuracy is due to a failure to comply with the due diligence requirement prescribed* under section 285BA(7) or is deliberate on the part of that person;
(b) the person knows of the inaccuracy at the time of furnishing the statement but does not inform the prescribed income-tax authority or such other authority or agency;
(c) the person discovers the inaccuracy after the statement is furnished and fails to inform and furnish correct information within a period of 10 days as specified under section 285BA(6),
then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees. *Rules in this regard are yet to be notified.
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