Form 61A of Income Tax Act (2023 Guide)

A Form 61A or Statement of Financial Transactions(STF) is a record listing certain financial transactions that must be presented under the Income Tax Act of 1961. This article explains form 61A of income tax act.

The Statement of Financial Transactions (STF) are of the following types:

1. Sale, buying, or exchanging any goods, rights, property, or interests in property;
2. labor contract.
3. provision of services. investments or expenses made;
4. Acceptance of deposits or loans.
5. It is important to note that given the nature of transactions, the CBDT may recommend different values ​​in relation to different transactions for different people.

What Is Form 61A of Income Tax Act

Generally, what taxpayers are required to submit to the government for a particular accounting period is a statement of a ‘specified financial transaction’ or SFT. Form 61A was prepared under Section 285 BA of the ITA and was formerly known as Annual Information Return or AIR.

Under the Income Tax Regulations 1962, Rule 144E provides that details such as the nature and value of the transaction must be reported on Form 61A. Taxpayers must file Form 61A on May 31 of each year immediately after the end of the fiscal year to record the details. Where applicable, it helps us maintain proper records of tax returns

How Do I File Form 61A

This section describes how to file Form 61A. Follow the steps below.

1. Form 61A can be downloaded from the Income Tax Portal incometaxindia.gov.in . Here is the download link.
2. After downloading Form 61A, complete and save the form. This is for re-uploading to the portal.
3. Go to the Income Tax Portal. here is the link.
4. Log in to the Income Tax Portal using credentials such as User ID, Authorized PAN, or his AADHAR ID.
5. Go to E-Files and upload your saved Form 61A.
6. After uploading the form, details such as the PAN of the reporting entity, form name, and reporting entity category will be displayed on the screen.
7. Attach the Form 61A zipped form along with the signature file. 
8. Click the Upload button.
9. Once the process is complete, a confirmation message will appear on the screen indicating the status of the upload.

How Do I Download SFT Form 61A

This section describes how to file Form 61A. Follow the steps below.

1. Form 61A can be downloaded from the Income Tax Portal (incometaxindia.gov.in). Here is the download link.
2. After downloading Form 61A, complete and save the form. This is for re-uploading to the portal.
3. Go to the income tax portal incometaxindia.gov.in.

What Is the Purpose of SFT

Form 61A has proven useful for IT departments as it facilitates effective tracking of high-value transactions. It also helps identify how certain groups of people tend to avoid paying taxes.

The primary purpose of Form 61A is to provide transparency. It also helps taxpayers keep a record of all high-value transactions made in a given fiscal year. Under sections (a) through (h) of Rule 114B, the taxpayer may use Form 61A instead of a PAN card to carry out specified transactions.

How Do I Report SFT in Income Tax Return

Schedule A of Rule 114E establishes certain transactions that must be reported on Form 61A of the Income Tax Act. Transactions reported on Form 61A.

Now let’s look at the types of transactions recorded on Form 61A and the companies doing so.

1. Banking institutions and post offices with deposits exceeding ₹10 lakh in one or more accounts.
2. Bank and co-operative banking institutions that withdraw or deposit more than ₹50 lakh (annually) from a current account or have cash payouts of over ₹10 lakh for purchase orders and or bills of exchange. It also includes the purchase of RBI investment instruments such as RBI bonds.
3. Companies that issue shares in excess of ₹10 lakh (annually) to those who wish to purchase shares.
4. Companies or institutions issuing bonds and debentures in excess of ₹10 lakh (annually) to individuals wishing to purchase bonds or debentures.
5. Share buyback of more than Rs 10,000 from a listed company.
6. Foreign exchange dealer for the sale of over ₹10 lakh worth of foreign currencies or expenses incurred.
7. A mutual fund manager or trustee issuing shares of a mutual fund exceeding Rs.1,00,000 to an individual. 
8. Inspector General or Sub-Registrar for sale or purchase of assets exceeding Rs. ₹30 lakh.
9. An individual who is required to audit the sale of goods or the provision of services worth ₹2 lakh.

What Are SFT Assets

Securities financing transactions (SFTs) allow investors and companies to use assets they own, such as stocks and bonds, to fund their activities.

Securities finance transactions can be:

1. Repurchase agreement – ​​agreeing to sell a security and buy it back in the future for the original amount and consideration for the use of that money
2. Borrowing collateral for payment against a guarantee in the form of a financial instrument or cash from a borrower.
3. Buyback or sell-back trade
4. A margin lending business

Who Needs to File SFT

There needs to file SFT

1. Banking companies, cooperative banks
2. Non-Bank Financial Company (NBFC)
3. The institution that issues credit cards
4. A person who falls under the test under Section 44AB of the Income Tax Act.
5. company issuing corporate bonds
6. Company issuing shares
7. investment trust
8. A company listed on a recognized stock exchange
9. Trustee of an investment fund or a person approved by the trustee
10. Authorized Dealer, Offshore Banking Entity, Money Changer, or other people as defined by FEMA
11. Inspector General or Deputy Registrar appointed under the Registrations Act 1908

Frequently Asked Question (FAQs):-

Can Form 61A be revised?

If the submitted SFT is deemed to contain an error by an income tax authority, the reporter/individual will be notified by that authority and given an opportunity to correct the Errors within 30 days of notification date. 

Is it mandatory to file Form 61A?

Taxpayers are obliged to apply for this within a set period. Please note that if you still fail to file Form 61A, you will have to pay Rs. 500/day late.

Conclusion

Now, as you know about form 61A of income tax act. Form 61A or Statement of Financial Statements (STF), as the name suggests, is a record of declarations of certain financial transactions that taxpayers are required to file with the government for a specific accounting period. 

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