Every year, the Income Tax Department receives information about billions of rupees in financial transactions-from bank deposits and property purchases to mutual fund investments and credit card payments-all through the Statement of Financial Transactions (SFT) mechanism. This information forms the backbone of the Annual Information Statement (AIS), pre-filled ITR data, and the Department’s data analytics for identifying non-filers and under-reporters.
Under the Income Tax Act, 2025 (effective 1 April 2026), Section 285BA continues to govern SFT reporting, with the detailed transaction categories and monetary thresholds prescribed under Rule 114E of the Income Tax Rules. The reporting framework has expanded significantly since its introduction as the Annual Information Return (AIR) in 2003-the 4th Amendment Rules of 2021 added dividends, capital gains on listed securities, and interest income to the reportable categories, and the 2026 Rules carry these forward.
This guide covers who must report, what transactions are reportable, the monetary thresholds, the filing procedure, the AIS integration, and the penalty framework. For businesses and individuals managing income tax return filing (https://www.patronaccounting.com/income-tax-return), understanding SFT is essential because the data reported by third parties directly populates your AIS and can trigger mismatch notices if your ITR does not align.
Who Must Report: Specified Reporting Entities
Section 285BA, read with Rule 114E, identifies the following categories of reporting entities:
| # | Reporting Entity | Reports Through | Key Transactions |
|---|---|---|---|
| 1 | Banking company or cooperative bank | Form 61A | Cash deposits/withdrawals, time deposits, credit card payments |
| 2 | Post Master General / Post office | Form 61A (may use CD/DVD) | Cash deposits/withdrawals, time deposits |
| 3 | Nidhi / NBFC under RBI Act | Form 61A | Time deposits exceeding thresholds |
| 4 | Company or institution issuing bonds/debentures | Form 61A | Acquisition of bonds/debentures exceeding Rs 10 lakh |
| 5 | Company issuing shares (including through buy-back) | Form 61A | Acquisition of shares exceeding Rs 10 lakh; buy-back of shares |
| 6 | Trustee of mutual fund / person managing MF | Form 61A | Acquisition of MF units exceeding Rs 10 lakh |
| 7 | Registrar / Sub-Registrar (Inspector General) | Form 61A (may use CD/DVD) | Purchase/sale of immovable property exceeding Rs 30 lakh |
| 8 | Authorised dealer in foreign exchange | Form 61A | Foreign currency purchase/sale, forex card loading exceeding Rs 2 lakh |
| 9 | Credit card issuing bank/institution | Form 61A | Credit card payments: Rs 1 lakh cash, Rs 10 lakh total |
| 10 | Person receiving cash payment for goods/services (Section 44AB) | Form 61A | Cash receipts exceeding Rs 2 lakh per transaction for goods/services |
| 11 | Stock exchange / recognised association | Form 61A | Capital gains on listed securities, purchase/sale of listed shares |
| 12 | Depository (NSDL/CDSL) | Form 61A | Capital gains on listed securities (reported half-yearly) |
| 13 | Company (dividends) | Form 61A | Dividend distributed to any person during the FY |
| 14 | Prescribed reporting financial institution (FATCA/CRS) | Form 61B | Reportable accounts under FATCA/CRS for non-residents |
For companies registered through company registration (https://www.patronaccounting.com/private-limited-company-registration) and issuing shares, bonds, or distributing dividends, SFT reporting is mandatory. The reporting obligation falls on the entity, not the individual transacting party.
Reportable Transactions and Monetary Thresholds
The following table consolidates the prescribed transactions and their threshold values under Rule 114E:
| SFT Code | Transaction Type | Reporting Entity | Threshold |
|---|---|---|---|
| 001 | Cash deposits in savings account | Bank / Post office | Aggregate Rs 10 lakh in a FY |
| 002 | Cash deposits / withdrawals in current account | Bank / Post office | Aggregate Rs 50 lakh in a FY |
| 003 | Time deposits (FD/RD) | Bank / Post office / Nidhi / NBFC | Aggregate Rs 10 lakh in a FY (or Rs 10 lakh renewals in a FY) |
| 004 | Credit card payments - cash | Credit card issuing bank/institution | Aggregate Rs 1 lakh in a FY |
| 005 | Credit card payments - total (any mode) | Credit card issuing bank/institution | Aggregate Rs 10 lakh in a FY |
| 006 | Bonds / debentures (excluding govt securities) | Company / institution issuing them | Aggregate Rs 10 lakh in a FY |
| 007 | Shares (including buy-back) | Company issuing shares | Aggregate Rs 10 lakh in a FY |
| 008 | Mutual fund units | Trustee / manager of MF | Aggregate Rs 10 lakh in a FY |
| 009 | Foreign currency / travellers cheques / forex cards | Authorised dealer | Aggregate Rs 2 lakh in a FY |
| 010 | Cash receipts for goods/services (Section 44AB persons) | Person liable to tax audit | Rs 2 lakh per transaction |
| 011 | Cash deposits during specified periods | Bank / Post office | Rs 12.5 lakh (current a/c) or Rs 2.5 lakh (other a/c) during 9 Nov-30 Dec 2016 |
| 012 | Purchase / sale of immovable property | Registrar / Sub-Registrar | Rs 30 lakh or more |
| 013/014 | Capital gains on listed securities and MF units (added 2021) | Stock exchange / depository / MF trustee | No monetary threshold - all transactions reported |
| 015 | Dividend income (added 2021) | Company distributing dividend | No monetary threshold - all dividends reported |
| 016 | Interest income (added 2021) | Bank / Post office / cooperative society | No monetary threshold - all interest reported |
Important aggregation rule: For threshold-based transactions (SFT codes 001-009), amounts across all accounts of the same nature maintained by the person must be aggregated. For example, if a person has two savings accounts in the same bank with deposits of Rs 6 lakh and Rs 5 lakh respectively, the aggregate is Rs 11 lakh, which exceeds the Rs 10 lakh threshold and must be reported.
For businesses using tax audit services (https://www.patronaccounting.com/tax-audit), SFT code 010 is particularly relevant-any cash receipt exceeding Rs 2 lakh in a single transaction for goods or services must be reported. This applies to all persons liable to tax audit under Section 44AB.
How to File SFT: Step-by-Step
- Register on the Reporting Portal. Visit the Income Tax e-filing portal, navigate to Pending Actions > Reporting Portal, and register to obtain an ITDREIN (Income Tax Department Reporting Entity Identification Number). ITDREIN is a 16-character alphanumeric ID unique to each reporting entity.
- Designate a Principal Officer and Designated Director. The Designated Director (MD/whole-time director for companies, managing partner for firms, proprietor for proprietorships, managing trustee for trusts) ensures overall SFT compliance. The Principal Officer handles day-to-day filings.
- Download the Report Generation Utility. Download the Java-based Report Generation Utility from the Reporting Portal. This utility generates and validates the XML file required for submission. Download the applicable XML schema for the specific transaction type.
- Prepare the SFT data. Form 61A has four parts: Part A (statement-level information, common to all transaction types), Part B (person-based reporting for aggregated financial transactions), Part C (account-based reporting for bank/post office accounts), and Part D (immovable property transactions). Select the appropriate part based on the transaction type.
- Generate and validate the XML. Enter transaction details in the utility, generate the XML file, and validate it against the prescribed schema. Resolve any validation errors before submission. For entities managing complex reporting through professional accounting services (https://www.patronaccounting.com/accounting-services), bulk data extraction from core banking systems and automated validation are essential.
- Sign and submit electronically. Sign the XML using a Digital Signature Certificate (DSC) via the Generic Submission Utility. Upload the signed and encrypted package on the Reporting Portal. Certain entities (Post Master General, Registrar, Inspector General) may submit via CD/DVD with paper verification in Form-V.
- Receive acknowledgment. On successful submission, an acknowledgment number is sent to the registered email. Retain this for compliance records.
Filing Deadlines
| Statement Type | Deadline |
|---|---|
| Form 61A (most transactions) | 31 May following the FY in which the transaction is registered/recorded |
| Form 61A (listed securities and MF transactions - SFT codes 013/014) | Half-yearly: 31 January (for H1: April-September) and 31 May (for H2: October-March) |
| Form 61B (FATCA/CRS reportable accounts) | 31 May following the calendar year |
Example: For transactions registered during FY 2025-26, the SFT in Form 61A must be filed by 31 May 2026.
How SFT Feeds Into Your Annual Information Statement (AIS)
The data reported through SFT by banks, companies, mutual funds, registrars, and other entities is aggregated and displayed in the taxpayer’s AIS on the e-filing portal. The AIS shows:
- All SFT-reported transactions against your PAN (savings deposits, FD, credit card payments, property purchases, MF investments, share transactions, dividends, interest, capital gains)
- The source entity that reported the transaction
- The aggregate value of each transaction type
- TDS/TCS details correlated with SFT data
When you file your ITR, the AIS data is used for pre-filling-income from dividends, interest, capital gains on listed securities, and MF transactions is automatically populated in your return form. If there is a mismatch between the SFT data in your AIS and the income declared in your ITR, the Department’s risk management system flags your return for verification or issues a mismatch notice.
This is why reviewing your AIS before filing your ITR is critical. If any SFT transaction is incorrect (e.g., a bank reported a deposit in the wrong PAN, or a property transaction was double-reported), you can provide feedback on the AIS portal to correct the data.
Penalty Framework
| Default | Penalty |
|---|---|
| Failure to file SFT within the prescribed time (31 May) | Rs 500 per day during which the failure continues (Section 271FA) |
| Failure to file after notice from IT authority (30-day notice) | Rs 1,000 per day from the day after the notice deadline expires |
| Filing inaccurate information in SFT | Rs 50,000 per statement (Section 271FAA) |
| Inaccuracy due to false/inaccurate info by holder of reportable account (FATCA) | Rs 5,000 additional on the reporting financial institution (recoverable from account holder) |
| Defective SFT not rectified within 30 days of intimation | SFT treated as invalid; consequences of non-furnishing apply |
Practical impact: For a reporting entity that files SFT 60 days late, the penalty is Rs 500 × 60 = Rs 30,000 for initial default. If a notice is issued and the entity still fails to file within the 30-day notice period, the penalty escalates to Rs 1,000/day from the notice deadline. The Rs 50,000 penalty for inaccuracy is separate and applies per statement, making data quality critical.
Old Framework vs New Framework (IT Act 2025)
| Aspect | IT Act 1961 | IT Act 2025 (from 1 April 2026) |
|---|---|---|
| Governing section | Section 285BA | Section 285BA (carried forward in the new Act; renumbered under compliance and reporting provisions) |
| Governing rules | Rule 114E (original 2016, expanded 2021) | Rule 114E carried forward under Draft IT Rules 2026 with same transaction categories and thresholds |
| Form | Form 61A / Form 61B | Form 61A / Form 61B (unchanged in draft rules) |
| Deadline | 31 May (annual); half-yearly for listed securities/MF | 31 May (annual); half-yearly for listed securities/MF (unchanged) |
| Penalty (non-filing) | Rs 500/day (Section 271FA); Rs 1,000/day post-notice | Same penalty structure carried forward under the 2025 Act penalty provisions (Section 455 framework) |
| Penalty (inaccuracy) | Rs 50,000 (Section 271FAA) | Rs 50,000 per statement (carried forward) |
| Expanded reporting (2021 amendments) | Dividends, capital gains on listed securities, interest income-added by 4th Amendment Rules 2021 | Carried forward into Draft IT Rules 2026; no monetary threshold for these categories |
Common Mistakes and How to Avoid Them
Mistake 1: Not registering for ITDREIN. Every reporting entity must register on the Reporting Portal and obtain an ITDREIN before filing. Without ITDREIN, the system will not accept the SFT. Registration should be completed well before the 31 May deadline.
Mistake 2: Not aggregating across accounts. The threshold for savings deposits is Rs 10 lakh aggregate across all savings accounts of the same person in the same entity. Reporting only per-account amounts without aggregation leads to under-reporting and potential penalty for inaccurate information.
Mistake 3: Filing on the wrong form. Form 61A is for most SFT transactions by specified reporting entities. Form 61B is exclusively for prescribed reporting financial institutions filing under FATCA/CRS obligations. Using the wrong form will result in rejection.
Mistake 4: Missing the half-yearly deadline for listed securities/MF transactions. Capital gains on listed securities and MF units must be reported half-yearly (31 January for H1 and 31 May for H2). Many entities miss the January deadline because they assume all SFT is annual.
Mistake 5: Not reviewing SFT data against the taxpayer’s AIS. As a taxpayer, your SFT data appears in your AIS. If any transaction is incorrectly attributed to your PAN, provide feedback on the AIS portal immediately-otherwise, it may trigger a mismatch notice when you file your ITR.
Key Takeaways
The Statement of Financial Transactions (SFT) is the primary data pipeline through which the Income Tax Department monitors high-value financial activities across the economy. Under Section 285BA and Rule 114E, 14+ categories of reporting entities must file SFT in Form 61A or Form 61B, covering cash deposits, time deposits, credit card payments, immovable property, shares, mutual funds, bonds, foreign exchange, dividends, capital gains, and interest income.
The monetary thresholds range from Rs 1 lakh (credit card cash payments) to Rs 50 lakh (current account transactions), with some categories (dividends, capital gains, interest) having no threshold at all-every rupee is reported. The data feeds directly into the taxpayer’s AIS, enabling pre-filled ITR and mismatch detection.
Penalties are steep: Rs 500/day for late filing (escalating to Rs 1,000/day post-notice) and Rs 50,000 per statement for inaccuracy. The reporting framework remains substantially unchanged under the IT Act, 2025 and Draft IT Rules, 2026, with the expanded 2021 categories (dividends, capital gains, interest) carried forward.
For both reporting entities and individual taxpayers, SFT compliance is not optional-it is a core component of India’s tax information infrastructure.
Ensure Your SFT Compliance Is Airtight
SFT filing involves complex data extraction, aggregation across accounts, threshold validation, XML generation, DSC signing, and portal submission-all within the 31 May deadline. Errors trigger penalties starting at Rs 500/day, and inaccurate reporting costs Rs 50,000 per statement. Whether you are a bank, NBFC, company, mutual fund house, or a tax-audit-liable business, professional support ensures data accuracy and timely filing.
Explore our income tax compliance services (https://www.patronaccounting.com/income-tax-return) for SFT filing support, AIS reconciliation, and third-party data verification under the new Act.
For queries, reach out at +91 945 945 6700 or WhatsApp us directly.
