Companies need to know about SFT Compliance - Introduction: The Government of India along with the Ministry of Finance has widened the tax base. Which has resulted in bringing more and more compliance responsibilities on the companies. Companies must be aware that non-compliance with respect to certain high-value transactions might get them an Income Tax notice. The Income-tax department requires companies to submit a statement of Specified Financial Transactions (SFT). SFT reporting is mandatory for certain reporting entities from Finance Act 2014 by introducing section 285BA followed by additions made in Finance Act 2020 through notification no. 16/2021, dated 12-03-2021. This article focuses on SFT reporting which is applicable to the companies and documents require for reporting such transactions.
- Why SFT has been introduced?
SFT Reporting has been introduced to – a) Track tax evasion and adherence to correct and accurate reporting by taxpayers. b) Curb the black money. c) Strengthen the reporting mechanism. d) Make the ITR procedure simple. - Nature & value of Reportable Transactions: The below-mentioned table shows the nature of the transactions to be reported and documents require to file SFT:
| Reporting person | Nature of transactions | Threshold limit | Mandatory fields of SFT Return | Information Required for SFT Return | | The company issuing Bonds or Debentures | Receipt from any person for acquiring bonds or debentures issued by the company or institution (other than renewal) | Rs. 10 lakh or more | Details of persons to whom Bonds or Debentures are issued: Name, PAN, Aadhar, Email ID, complete Address, Pin code, mobile number, person type Details of Debentures issued: No. of debentures or bonds issued, issue price, face value, premium/ discount amount (if any). | – PAN – Aadhar – Address Proof – Form PAS 3 – Debentures or Bonds Subscription Agreement – Debenture/ Bonds issue certificate | | The Company issuing shares | Receipt from any person for acquiring shares (including share application money) issued by the company | Rs. 10 lakh or more | Details of persons to whom shares are issued: Name, PAN, Aadhar, Email ID, complete Address, Pin code, mobile number, person type Details of Shares issued: No. of shares issued, face value, issue price, premium amount (if any) | – PAN – Aadhar – Address Proof – Form PAS 3 – Shares subscription agreement – Share certificate | | Reporting person | Nature of transactions | Threshold limit | Mandatory fields of SFT Return | Information Required for SFT Return | | The Company liable for tax audit under sec 44AB | Cash receipt for sale, by any person, of goods or services of any nature | Rs. 2 lakh or more | Details of persons from whom the cash was received: Name, PAN, Aadhar, Email ID, complete Address, Pin code, mobile number, person type Particulars of cash received: Amount of cash received | – PAN – Aadhar – Address Proof – Copy of Invoice | | The Company paying dividend | Payment of Dividend | NA | Details of persons from whom the cash was received: Name, PAN, Aadhar, Email ID, complete Address, Pin code, mobile number, person type Particulars of cash received: Amount of cash received
| – PAN – Aadhar – Address Proof |
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