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SFT Transactions in Form 26AS – You should verify before filing ITR

SFT in Form 26AS – Filing ITR, you should check Form 26AS for SFT. The new concept of SFT is added recently by the Income tax department. SFT is abbreviated word. Full form of SFT is Statement of Financial Transactions. The prime purpose of tracking and including SFT in form 26AS is curbing black money.

Black Money is major problem in India. As per estimate India has approximate 20 Lakh Cr black money. Most of the Indian earns money but they do not want to pay Income tax. They have tendency to accumulate black money. In order to address this challenge various schemes were introduced like demonetization, income declaration scheme etc. One such recent initiative by the government of India is operation clean money. Under this scheme, information about high value financial transaction to be tracked and reported.

These transactions shall be reported in Form 26AS by the Income Tax department. You should check SFT in Form 26AS before filing your income tax return. If you miss any transactions it may invite you tax related issues.

What is Statement of Financial Transaction?

Statement of financial transaction is record of specific financial transaction done by specific person. All high value transactions need to be reported as per income tax law. These high value transaction is included in statement of financial transaction.

Various financial institutions and entities are made responsible to report these transactions. The government has launched specific portal on which these transactions to be reported.

The statement of financial transaction is to be submitted before end of financial year. The income tax department keep eyes on such financial transaction and take appropriate action as per requirement.

Which all SFT will be reported in Form 26AS?

Following SFT will be reported in Form 26AS.

#1 SFT-001 – Purchase of bank drafts or pay order in cash

#2 SFT-002 – Purchase of pre-paid instrument in cash

Payment made in cash for amount aggregating 10 lakh or more in a financial year for purchase of bank draft comes under SFT-001 & SFT-002. Banking company or co-operative bank is responsible for reporting these transactions.

#3 SFT- 003 – Cash deposit in current account

#4 SFT-004 – Cash deposit in account other than current account

Cash deposit or withdrawal equal or above 50 lakh in one or more current account of the person. Cash deposit aggregating 10 lakh or above in the financial year in one or more account (other than current account and time deposit) comes under SFT-003 & SFT-004. These transactions needs to be reported by banking company or co-operative bank.

#5 SFT-005 – Time Deposit

One or more time deposits of a person aggregating to 10 lakh or above in a financial year comes under SFT-005. All Banking company or co-operative bank, post office, non-banking financial company needs  to report these financial transactions.

SFT form 26as

#6 SFT- 006 – Payment for credit card

Payments made by any person of an amount aggregating to 1 Lakh or more in cash or 10 Lakh by any other mode against bill raised in respect of one or more credit cards issued to the person fall under SFT-006. Credit card issuing authority is responsible for reporting these financial transactions.

#7 SFT- 007 – Purchase of debentures

#8 SFT- 008 – Purchase of shares

#9 SFT- 009 – Buy back of shares

Receipt from any person of an amount aggregating to 10 lakh rupees or more in a financial year for acquiring bonds, debentures or shares issued by the company or institution. Buy back of shares from any person for amount aggregating to 10 lakh rupees in a financial year falls under SFT-007, SFT-008 and SFT-009. A company or institution issuing bonds or debenture and company issuing share is responsible for reporting these transactions.

#10 SFT- 010 -Purchase of mutual fund units

Receipt from any person of an amount aggregating to 10 lakh rupees or more in a financial year for acquiring units of one or more schemes of a Mutual Fund comes under SFT-010. A mutual fund company is responsible for filing these transactions.

#11 SFT- 011 – Purchase of foreign currency

Purchase of foreign currency by any means including credit card, debit card, traveler cheque aggregating 10 lakh or more in financial year falls under SFT-011. Authorized person responsible for managing foreign currency needs to report these transactions.

#12 SFT-012 – Purchase or sale of immovable property

Purchase or sale by any person of immovable property for an amount of 30 lakh rupees or more or valued by the stamp valuation authority comes under SFT-012. Registrar or sub-registrar reports such transactions.

#13 SFT- 013 – Cash payment for goods and services

Receipt of cash payment exceeding 2 Lakh rupees for sale, by any person of goods and services of any nature falls under SFT-013. A person liable for audit shall report such transactions.

statement of financial transactions

Why you should verify these transactions before filing ITR?

Whenever you are filing income tax return apart from checking Form 26AS TDS transaction you should check for SFT mentioned in this form.

The income declared by you in income tax return should able to justify SFT transaction mentioned in form 26as.

In case your ITR income details are not matching or less compared to transaction made in the financial year, you are likely to face issue of income tax notice or scrutiny.

If you are facing issue in filing income tax return with respect to statement of financial transactions, you should take help from professional charted accountant.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money.