How to Prepare Statement of Financial Transactions

Section 285BA of the IT Act 1961 requires specific reporting persons to furnish statement of financial transaction. Rule 114E of the Income Tax Rules, 1962 specifies that the statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in Form No. 61A.

The prescribed schema for Form 61A can be downloaded from the e-filing website home page under “Schema & Validation Rules” tab and a utility to prepare Form 61A XML file can be downloaded from the e-filing website home page under forms (other than ITR) tab.

Transaction Types

Reporting person/entity is required to furnish separate Form 61 A for each transaction type. The transaction types under SFT have been categorised as under:

SFT- 001: Purchase of bank drafts or pay orders in cash
SFT- 002: Purchase of pre-paid instruments in cash
SFT- 003: Cash deposit in current account
SFT- 004: Cash deposit other than in current account
SFT- 005: Time deposit
SFT- 006: Payment for credit card
SFT- 007: Purchase of debentures
SFT- 008: Purchase of shares
SFT- 009: Buy back of shares
SFT- 010: Purchase of mutual fund units
SFT- 011: Purchase of foreign currency
SFT- 012: Purchase or sale of immovable property
SFT- 013: Cash payment for goods and services
SFT- 014: Cash deposits during specified period (1st April, 2016 to 8th November, 2016 and 9th Nov to 30th Dec, 2016).

Identification of each transactions must be reported

The first step while preparation of Financial Transactions statement is to identify transactions/persons/accounts which are reportable under Rule 1 14E. In the second step, the reporting person/entity is required to submit details of transactions/persons/accounts which are determined as reportable.

Aggregation Rule

Aggregation rule needs to be applied for specified transaction types to identify transactions/persons/accounts which are reportable. Rule 1 14E specifies that the reporting person shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person –

(a) take into account all the accounts of the same nature maintained in respect of that person during the financial year;

(b) aggregate all the transactions of the same nature recorded in respect of that person during the financial year;

(c) attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons, in a case where the account is maintained or transaction is recorded in the name of more than one person;

The aggregation rule is applicable for all transaction types except SFT- 012 (Purchase or sale of immovable property) and SFT- 013 (Cash payment for goods and services).

Reporting Format

Form 61A has four parts. Part A contains statement level information is common to all transaction types. The other three parts relate to report level information which has to be reported in one of the following parts (depending on the transaction type):

Part B (Person Based Reporting)
Part C (Account Based Reporting)
Part D (Immovable Property Transaction Reporting)
The applicability of the reporting format is discussed in following paragraphs.

Person Based Reporting (Part B)

Part B shall be used for person based reporting which is relevant to following transactions:

SFT- 001: Purchase of bank drafts or pay orders in cash
SFT- 002: Purchase of pre-paid instruments in cash
SFT- 005: Time deposit
SFT- 006: Payment for credit card
SFT- 007: Purchase of debentures
SFT- 008: Purchase of shares
SFT- 009: Buy back of shares
SFT- 010: Purchase of mutual fund units
SFT- 011: Purchase of foreign currency
SFT- 013: Cash payment for goods and services

For crucial reportable persons and transactions, the coverage person/entity is needed to combination all the transactions of a similar nature recorded in respect of the person throughout the fiscal year (refer to the pertinence of aggregation rule). In a case, wherever the dealing is recorded within the name of quite one person, the news person/entity ought to attribute the whole worth of the dealing or the collective worth of all the transactions to any or all the persons.

The news person/entity is needed to submit details of persons and transactions that square measure determined as reportable. The news format conjointly allows news person/entity to furnish data concerning every individual product among a product kind. E.g: if someone has multiple credit cards and therefore the mixture worth of the transactions all told credit cards exceeds the brink worth, the combination dealing worth are going to be rumored in section B3 of type sixty one A and therefore the transactions touching on individual credit cards will be rumored in section B4 of type sixty one A.

Account Based Reporting (Part C)

Part C shall be used for account based reporting which is relevant to following transactions:

SFT- 003: Cash deposit in current account
SFT- 004: Cash deposit in account other than current account
SFT- 014: Cash deposits during specified period (1st April, 2016 to 8th November, 2016 and 9th Nov to 30th Dec, 2016).
For determining reportable persons and accounts, the reporting person/entity is required to take into account all the accounts of the same nature maintained in respect of that person during the financial year and aggregate all the transactions of the same nature recorded in respect of the person during the financial year (refer to the applicability of aggregation rule). In a case where the account is maintained in the name of more than one person, the reporting person/entity should attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons. In case of SFT- 003 (Cash deposit or withdrawals in current account), the threshold limit has to be applied separately to deposits and withdrawals in respect of transactions. After identification of reportable persons and accounts, the reporting person/entity is required to submit details of accounts which are determined as reportable. Part C3 of the form 61 A has details of the accounts that need to be reported along with the aggregate transaction values. Aggregation of transaction has the same definition as explained in person based accounting.

Immovable Property Transaction Reporting (Part D)

Part D shall be used for reporting of purchase or sale of immovable property (SFT- 012). The reportable immovable property transactions have to be determined by applying the threshold limit. The reporting person/entity is required to submit specified details of immovable property transactions which are determined as reportable.

Statement Type

One Statement can contain only one type of Statement. Permissible values for type of Statement are:

NB – New Statement containing new information
CB – Correction Statement containing corrections for previously submitted information
ND – No Data to report
Statement Number and Statement ID

Statement Number is a free text field capturing the sender’s unique identifying number (created by the sender) that identifies the particular Statement being sent. The identifier allows both the sender and receiver to identify the specific Statement later if questions or corrections arise. After successful submission of the Statement to ITD, a new unique Statement ID will be allotted for future reference. The reporting person/entity should maintain the linkage between the Statement Number and Statement ID. In case the correction statement is filed, statement ID of the original Statement which is being corrected should be mentioned in the element ‘Original Statement ID’. In case the Statement is new and unrelated to any previous Statement, ‘0’ will be mentioned in the element ‘Original Statement ID’.

Report Serial Number

The Report Serial Number uniquely represents a report within a Statement. The Report Serial Number should be unique within the Statement. This number along with Statement ID will uniquely identify any report received by ITD. In case of correction, the complete report has to be resubmitted. The Report Serial Number of the original report that has to be replaced or deleted should be mentioned in the element ‘Original Report Serial Number’.

This number along with Original Statement ID will uniquely identify the report which is being corrected. In case there is no correction of any report, ‘0’ will be mentioned in the element ‘Original Report Serial Number’.

Form 61 Acknowledgement No.

If news person/entity has received declarations in kind sixty in respect of transactions listed in Rule one 14E, kind sixty one is needed to be appointed to ITD. As mentioned in Chapter I, on productive loading of kind sixty one (containing the particulars of kind 60), associate Acknowledgement No. would be generated that needs to be mentioned at the time of filling kind 61A. Hence, unless kind sixty one has been appointed, news person/entity might face issue in filling kind 61A. consequently, it’s to be ensured that kind sixty one is appointed to the Department before kind 61A is stuffed.