The Central Board of Direct Taxes (CBDT) notified the Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for interest income.
Section 285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting persons to furnish SFT.
For the purposes of pre-filling the return of income, CBDT has issued Notification No. 16/2021 dated March 12, 2021 to include reporting of information relating to interest income. The new sub rule 5A of rule 114E specifies that the information shall be furnished in such form, at such frequency, and in such manner, as may be specified by the Director General of Income Tax (Systems), with the approval of the Board.
“Reporting entities are required to prepare the data file in prescribed format from their internal system. An excel based report preparation utility has also been provided to assist small reporting entities in preparing data file. The data files prepared by internal system/report preparation utility should be validated using Text File Validator/Submission Utility. After validation, the text file is required to be compressed, encrypted and signed using the Text File Submission Utility before uploading on the reporting portal (https://report.insight.gov.in/). Reporting entities, having large number of data files, can also submit the data files using SFTP Server (specific request may be made for SFTP upload),” the CBDT notified.
The statement of financial transactions shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded.
The statement of financial transaction shall be signed, verified and furnished by the specified Designated Director. Where the reporting person is a non resident, the statement may be signed, verified and furnished by a person who holds a valid power of attorney from such Designated Director. The data files are required to be uploaded at the reporting portal through the login credentials (PAN and password) of the designated director.
The reporting entities are advised to provide information of interest income, reported to the Income Tax Department, to the account holder (in the form of Interest Certificate either through email or portal) which will enable taxpayers to reconcile the information displayed in the Annual Information Statement (AIS) (Form 26AS).
In case, the reporting person/entity comes to know or discovers any inaccuracy in the information provided in the statement or the defects have been communicated to the reporting person/entity, it is required to remove the defects by submitting a correction/deletion statement.
The reporting person/entity is required to document and implement appropriate information security policies and procedures with clearly defined roles and responsibilities to ensure security of submitted information and related information/documents. The reporting person/entity is also required to document and implement appropriate archival and retrieval policies and procedures with clearly defined roles and responsibilities to ensure that submitted information and related information/documents are available promptly to the competent authorities.
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