SFT Reporting Changes 2026: New Transactions Added and Thresholds Revised

Even if you never hear the term “SFT”, it directly affects you. Every time you deposit more than Rs 10 lakh in cash, buy property above Rs 30 lakh, or invest above Rs 10 lakh in mutual funds, your bank or registrar reports the transaction to the Income Tax Department through the Statement of Financial Transactions. That data lands in your AIS - and if it does not match your ITR, expect a mismatch notice.

From April 2026, the SFT framework has expanded. Stamp paper purchases are now tracked, crypto-asset transaction statements are mandated, insurance reporting thresholds are lowered, and the penalty structure for reporting entities has been rationalised. This guide covers every SFT category, threshold, and reporting change.

What Is SFT and How Does It Affect Taxpayers?

Statement of Financial Transactions (SFT) is a reporting mechanism under Section 285BA of the Income Tax Act (corresponding provision under IT Act 2025) where specified entities are required to report high-value financial transactions to the Income Tax Department. Previously governed by Rule 114E of IT Rules 1962, the SFT framework is now codified under the IT Rules 2026.

Reporting entities include banks, post offices, property registrars, mutual fund companies, insurance companies, NBFCs, stock exchanges, and companies issuing shares or paying dividends. The reported data feeds into the taxpayer’s Annual Information Statement (AIS), which the department’s AI compares with the ITR.

Taxpayers filing income tax return filing must reconcile AIS entries with actual transactions before filing to prevent mismatch notices and potential scrutiny.

Key Terms You Should Know

• Section 285BA: The provision requiring specified entities to furnish SFT or reportable account information to the Income Tax Department. Corresponding section in IT Act 2025.
• Form 61A: The form used by reporting entities (banks, registrars, MF companies) to file SFT. Form 165 is introduced under IT Rules 2026 for certain new categories.
• Form 61B: For prescribed reporting financial institutions under FATCA/CRS. Filed by 31 May for each calendar year.
• AIS (Annual Information Statement): Your comprehensive financial profile maintained by the department, showing all SFT-reported transactions, TDS/TCS data, and other information.
• SHCIL: Stock Holding Corporation of India Limited. Now a reporting entity for stamp paper purchases under the new SFT framework.
• Section 509 (IT Act 2025): Requires crypto exchanges and platforms to furnish crypto-asset transaction statements. Part of the expanded SFT ecosystem.
• Aggregation Rule: All transactions of the same nature in the same person’s name during the financial year are aggregated to check if the threshold is crossed.

Who Should Care About SFT Changes?

• Individual taxpayers with high-value cash transactions, property purchases, or mutual fund investments - your transactions are reported and visible in AIS
• Banks, post offices, and NBFCs - reporting entities must update systems for new SFT categories and revised thresholds
• Property registrars - continue reporting transactions above Rs 30 lakh; now aligned with Rs 20 lakh PAN quoting threshold
• Insurance companies - lowered reporting thresholds mean more policies are reported
• Crypto exchanges and platforms - mandatory reporting under Section 509 with Rs 200/day penalty for non-compliance
• SHCIL - new reporting obligation for stamp paper purchases

For the PAN quoting side of these thresholds, refer to our PAN quoting rules guide.

Complete SFT Reporting Threshold Table for 2026

Note: The aggregation rule applies: all transactions of the same nature in the same person’s name during the financial year are added up to check if the threshold is crossed. Mutual fund and listed securities SFT are filed half-yearly (not annually). Stamp paper and crypto-asset reporting are new additions under IT Rules 2026.

How to Reconcile Your AIS with SFT Data: Step-by-Step

1. Download your AIS from the Income Tax e-Filing portal. Login → Services → Annual Information Statement. AIS shows all SFT-reported transactions, TDS/TCS data, and other financial information.
2. Compare AIS entries with your bank statements, investment records, and property documents. Check for cash deposit totals, FD amounts, MF investments, property transactions, and credit card payments. Each AIS entry should match your records.
3. Identify mismatches or incorrect entries. Common issues: bank reported a deposit in the wrong PAN (joint account attribution), MF company reported units at NAV instead of investment amount, duplicate reporting of the same transaction by different entities.
4. File feedback on incorrect AIS entries. On the AIS portal, you can provide feedback on each transaction: confirm, partially correct, not mine, or incorrect. The department considers this feedback during processing.
5. Ensure your ITR matches the corrected AIS. Once you have verified and corrected AIS entries, ensure your ITR income disclosures align with the AIS data. Mismatches trigger automated mismatch notices from the CPC.
6. Keep documentation for 6 years. All source documents (bank statements, broker notes, property deeds, MF statements) should be retained for 6 years from the end of the relevant assessment year.

Documents Needed for AIS Reconciliation

• Bank passbook / statements for all savings and current accounts
• Fixed deposit receipts and maturity statements
• Mutual fund account statements (CAMs / KFintech consolidated)
• Demat account holding and transaction statements
• Property sale deed / purchase deed with stamp duty value
• Credit card annual statements showing total payments
• Forex purchase receipts / wire transfer confirmations
• Insurance premium payment receipts
• Stamp paper purchase receipts (for new SHCIL reporting)
• Crypto exchange transaction history (for Section 509 reporting)

New SFT Categories Added from April 2026

1. Stamp Paper Purchases (by SHCIL): The Stock Holding Corporation of India Limited (SHCIL) is now required to report stamp paper purchases under the new SFT framework using Form 165. Threshold: Rs 2 lakh with PAN, Rs 1 lakh without PAN. SHCIL aggregates all purchases of the same nature by a person during the financial year. This closes a loophole where high-value stamp paper purchases (used in property deals, agreements, and litigation) went unreported.

2. Crypto-Asset Transaction Statements (Section 509): Crypto exchanges and platforms registered under PMLA are now required to furnish crypto-asset transaction statements under Section 509(1) of the IT Act 2025. Penalties: Rs 200/day for non-furnishing, Rs 50,000 for inaccurate information. This creates a parallel data trail alongside the 1% TDS under Section 194S, tightening the crypto compliance net. See our crypto ITR guide for how this affects individual filing.

3. Insurance Premium Reporting (Lowered Threshold): Under the new IT Rules 2026, the insurance premium reporting threshold has been lowered. More policies will now appear in taxpayers’ AIS, increasing the department’s visibility into premium payments and claims.

4. Capital Gains on Listed Securities and MF Units: CBDT has expanded SFT to include capital gains data from listed securities and mutual fund unit transfers. This is reported half-yearly, enabling pre-filling of capital gains schedules in the ITR.

Common Mistakes Taxpayers Make with SFT Data

Mistake 1: Not checking AIS before filing ITR. Many taxpayers file their ITR without verifying AIS entries. If SFT-reported transactions do not match ITR disclosures, automated mismatch notices are triggered. Always download and reconcile AIS before filing.

Mistake 2: Ignoring joint account attribution. SFT reports attribute the entire transaction to all account holders. If you have a joint bank account, a Rs 12 lakh cash deposit is reported against both PANs. Provide feedback on AIS to correct attribution if the deposit was made by the other holder. Consult our income tax notice help if you receive a mismatch notice.

Mistake 3: Assuming FD renewals are reported. FD renewals are reinvestments of existing funds - they are NOT fresh inflows and are typically not reported under SFT. Only fresh FD investments above Rs 10 lakh trigger reporting. Do not include renewal amounts in your reconciliation.

Mistake 4: Not providing AIS feedback on incorrect entries. If AIS shows a transaction that is not yours (wrong PAN attribution, duplicate reporting), use the feedback mechanism on the AIS portal. If you do not provide feedback, the department may assume the entry is correct and include it in your income profile.

Mistake 5: Thinking SFT only tracks cash. SFT covers cash deposits, FDs, property, mutual funds, shares, credit cards, forex, dividends, stamp papers, and now crypto. Even non-cash transactions above thresholds are reported. Your entire financial footprint is visible through SFT + AIS.

Penalties for SFT Non-Compliance (Reporting Entities)

The penalty structure for SFT non-compliance has been rationalised by Budget 2026.

Under the previous framework: Rs 500/day for late filing from the due date (31 May) until the notice. Rs 1,000/day after the notice period expired. No cap - penalties could accumulate to lakhs.

Under the Budget 2026 framework: Penalty is converted to “fee” and capped at Rs 1,00,000 per default. Rs 500/day before notice, Rs 1,000/day after notice - but total cannot exceed Rs 1 lakh. Rs 50,000 penalty for furnishing inaccurate information or failing to comply with due diligence requirements.

For individual taxpayers, SFT non-compliance is indirect: if your transactions are not reported correctly by the entity, your AIS may show incorrect data, leading to mismatch notices that you must address.

How SFT Connects with AIS, ITR Pre-Filling, and Tax Assessment

SFT is the data collection layer; AIS is the taxpayer-facing display; ITR pre-filling is the automated output. The department’s AI analyses patterns across SFT data, AIS entries, and ITR disclosures to identify under-reporting, unreported income, or suspicious cash flows.

For TY 2026-27, the pre-filling of ITR forms is expected to include SFT-sourced capital gains data from listed securities and mutual funds. This means your Schedule CG / Schedule 112A may be partially pre-filled with data from stock exchanges and AMCs.

Taxpayers filing ITR filing should treat AIS reconciliation as a mandatory pre-filing step - not optional. The cost of ignoring SFT-sourced data is a mismatch notice, potential penalty, and assessment.

SFT vs PAN Quoting: Understanding the Two-Layer System

Key Takeaways

SFT reporting under Section 285BA / IT Rules 2026 has expanded to include stamp paper purchases (by SHCIL), crypto-asset transaction statements (under Section 509), lowered insurance premium thresholds, and capital gains data from listed securities and mutual funds.

Core SFT thresholds remain: Rs 10 lakh cash in savings, Rs 50 lakh in current, Rs 10 lakh FD/MF/shares, Rs 30 lakh property, Rs 10 lakh forex, Rs 10 lakh credit card (Rs 1 lakh cash). Mutual fund and listed securities SFT is now filed half-yearly.

All SFT-reported transactions appear in your AIS and are cross-referenced with your ITR. Mismatches trigger automated notices. Reconciling AIS before filing ITR is now a mandatory best practice.

Budget 2026 rationalised the penalty for SFT non-compliance: converted to fee, capped at Rs 1 lakh (previously uncapped). Rs 50,000 penalty for inaccurate information remains.

SFT and PAN quoting are complementary systems: PAN quoting operates at the taxpayer-counter interface; SFT operates as backend entity-to-department reporting. Together, they create a comprehensive financial surveillance ecosystem powered by AI analytics.

Need Help with AIS Reconciliation and ITR Filing?

With SFT data now covering cash, property, investments, insurance, stamp papers, and crypto, your AIS is more comprehensive than ever. Mismatches between AIS and ITR are the primary trigger for automated notices. Professional reconciliation before filing ensures accuracy and prevents costly scrutiny.

Explore our ITR filing for expert assistance with AIS reconciliation, SFT data verification, and compliant income tax return filing under the new IT Act 2025.

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