Have you filed Specified Financial Transaction (SFT) return?

Source: The Hitavada      Date: 29 May 2018 12:32:33


 

By CA Sandeep W. Jotwani

The Annual Information Return (AIR) Scheme was introduced from April 1, 2014 which requires various agencies like banking company, co-operative societies, depository, insurance companies, mutual funds, etc., to provide the required information to the Income-Tax Department through specified medium. Under this list of reporting entities, it covers all those person whether proprietary concern (individual) or any other entity who are liable for audit under 44AB of the Income-Tax Act, 1961 i.e. who have to get the books of accounts audited who are also required to report the specified transactions.
The compliance for the same has to be done through the reporting portal of the Income-Tax Department through which entities are suppose to submit their response in the prescribed format and Specified Financial Transaction (SFT) Return for the financial year 2017-18 has to be submitted before the due date which is May 31, 2018.


Many people are facing some practical issues and it’s important to understand various issues arising while filing the SFT returns specifically for those assessee who are liable for audit under section 44AB of the Income-Tax Act.
First such assessee need to understand whether there are any reportable transaction and accordingly should decide about the filing the prescribed form. The transaction type is divided into 14 different categories and out of these 14, assessee should ascertain which one is applicable and also have to find out whether there are any reportable transaction under the list of 14 transaction type. If answer to all these 14 SFT transaction type is either not applicable/nil transaction, then assessee may file the preliminary response.


If there is any reportable transaction in any of the 14 SFT transaction type, then they are suppose to file SFT return in prescribed form.The common reporting for assessees who are required to audit their books under section 44AB will be required to file a statement giving details of all cash receipts for goods and services exceeding 2 lakh per transaction. CBDT wide its notification dated December 23, 2016 that reporting requirement is applicable on receipt of cash payments and there will be no aggregation for reckoning the limit of 2 lakh. What is ITDREIN: In case there are reportable transaction, the reporting entity has to register with the Income-Tax Department and generate Income- Tax Department Reporting Identification Number (ITDREIN). It’s an identification number allotted by the Income-Tax Department to the reporting entity.


Preliminary response: For filing preliminary response assessee has to log into www.incometaxindiaefiling.gov.in > My Account > Reporting Portal (Beta Version). After this assessee will be directed to the reporting portal from where they have to select the option of filing SFT preliminary response. Please note that in case there are no reporting transaction please don’t generate ITDREIN. In case an assessees generates ITDREIN by mistake even though they do not have a reporting transaction, they will not be able to file the preliminary response as explained above. In such cases, assessee will have to register at the reporting portal from www.incometaxindiaefiling.gov.in > My Account > Reporting Portal (Beta Version) > New Registration (under Reporting Portal). After selecting new registration they will have to select the form for reporting the specified transaction by assessee covered under section 44 AB under Reporting Entity Category Others.
Principle Officer & Designated Director: For registration, assessee has to register a person who will act as the Principle Officer and the PAN of the Principle Officer will be used as user ID to log into the reporting portal. For filing the form, assessee also have to register a person who will act as Designated Director of the entity and only Designated Director has the privilege to upload the statement. The same person can act as Principle Officer as well as designated director. The details of Principle Officer and Designated Director can be changed and updated anytime after logging into the profile section at the reporting portal.


Is digital signature compulsory?: For filing preliminary response, digital signature is not compulsory. But, for submission of forms like Form 61A, digital signature will be required. Can entity delete ITDREIN?: While registration for ITDREIN, if form type is wrongly selected, it cannot be deleted or modified. It is advisable to file a service request that the ITDREIN was wrongly registered with wrong form type so that assessee can be safe in case notice for non filing is served later on. For filing the correct statement, assessee must follow, www.incometaxindiaefiling.gov.in > My Account > Reporting Portal (Beta Version) > Manage Principle Officer (under Reporting Portal). Here select the correct form and complete the filing procedure..
Consequence of non compliance: Non-compliance of above provisions attract penalty of Rs 500 per day for which failure continues and of Rs 50,000 for inaccurate information in the statement.


Is it mandatory to file nil statement: It is advisable to file the SFT returns within due date and help the government in the operation clean money. Most of the assessee who do not have any transaction to report are further advised in their own interest to file the preliminary response to avoid any inconvenience and penal provisions under the act.(The author is Immediate Past Chairman of ICAI, Nagpur Branch and can be reached at [email protected])