The Central Board of Direct Taxes (CBDT) has issued a corrigendum with respect to guidelines issued for submission of SFT for Mutual Fund Transactions by Registrar & Share Transfer Agent.
In a recent development, the Central Board of Direct Taxes (CBDT) has issued a corrigendum to the Notification no. 4 of 2021, dated April 30, 2021, outlining the format, procedure, and guidelines for the submission of Statement of Financial Transactions (SFT) data for mutual fund transactions by Registrars and Share Transfer Agents (RTAs). This update comes in compliance with Section 285BA of the Income Tax Act and Rule 114E sub-rule 5A.
The initial notification provided a comprehensive framework, detailing various files, file formats, and data types for different fields that require reporting. It also emphasized the validation of Data Quality (DQ) rules by RTAs before the submission of data.
Following discussions with representatives from Depositories, RTAs, and Exchanges, the CBDT has introduced key changes to the existing notification.
One notable amendment involves S.No. 6 of the original notification, which specified deadlines for submitting the statement of financial transactions. The revised guideline now states that starting from April 1, 2023, the submission will occur on a half-yearly basis. This means that data related to the first half of the Financial Year ending September 30 and the remaining half ending on March 31 shall be furnished by October 31 and April 30, respectively.
To further clarify, the CBDT has issued a corrigendum to Notification No. 4 of 2021, outlining these changes for seamless compliance.
Additionally, Annexure A, detailing the Guidelines for the Preparation of Statement of Financial Transactions (SFT), has been updated. Specifically, S.No. 7 now mentions the specified minimum period of holding for different asset classes as: –
| Security Class | Security Class Description | Minimum Period of Holding |
| EMF | Unit of Equity Oriented Mutual Fund | 12 months |
| UTI | Unit of UTI | 12 months |
| OTU | Other Units | 36 months |
This should be read as: —
| Security Class | Security Class Description | Minimum Period of Holding | Remarks |
| EMF | Unit of Equity Oriented Mutual Fund | 12 months | |
| UTI | Unit of UTI | 12 months | Where more than 35% of its total proceeds are invested in the equity shares of domestic companies, this information should be provided. Note: Where not more than 35% of its total proceeds are invested in the equity shares of domestic companies, (Specified Mutual Fund), it will always be classified as short-term capital asset (Applicable from 1st April 2023). |
| OTU | Other Units | 36 months | Where more than 35% of its total proceeds are invested in the equity shares of domestic companies, this information should be provided. Note: Where not more than 35% of its total proceeds are invested in the equity shares of domestic companies, (Specified Mutual Fund), it will always be classified as short-term capital asset (Applicable from 1st April 2023). |
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