Guidance on Form 61A under Section 285BA of the Income Tax Act due date 31st May

Introduction

Under Section 285BA of the Income Tax Act, specified entities are required to furnish a statement of financial transactions (SFT) to enhance transparency and curb tax evasion. Compliance with this requirement is critical, as non-compliance attracts penalties.

Applicable Entities

Entities required to file Form 61A include banks, cooperative banks, post offices, depositories, registrars, bond or debenture issuers, insurance companies, mutual funds, credit card issuers, and authorized foreign exchange dealers.

Transaction Thresholds for Reporting

The following table outlines the transaction types and their respective reporting thresholds:

Transaction Type	Threshold
Cash deposits in savings accounts	₹10 lakh or more per financial year
Cash withdrawals from savings accounts	₹10 lakh or more per financial year
Cash deposits in current account	₹50 lakh or more per financial year
Cash withdrawals from current account	₹50 lakh or more per financial year
Sale or purchase of immovable property	₹30 lakh or more
Credit card payments	₹1 lakh or more in cash or ₹10 lakh via other modes per financial year
Mutual fund investments	₹10 lakh or more per financial year
Bonds or debenture transactions	₹10 lakh or more per financial year
Share transactions in a company	₹10 lakh or more per financial year
Buyback of shares	Transactions valued at ₹10 lakh or more per financial year
Foreign currency exchange	₹10 lakh or more per financial year

Compliance Checklist for Form 61A

1. Entity Registration and Pre-Verification:

   • Register on the Income Tax e-filing portal.
   • Verify details like PAN, TAN, and contact information.

2. Record Collection and Management:

   • Establish protocols for collecting and managing relevant transaction data.
   • Implement and monitor internal controls for data accuracy.

3. Data Preparation and Verification:

   • Use the Income Tax Department's Data Preparation Utility (DPU) to prepare data.
   • Conduct internal audits to verify data accuracy.

4. Encryption and Digital Signature:

   • Encrypt data files using the prescribed method.
   • Digitally sign the encrypted files with a valid digital signature.

5. Timely Submission:

   • Submit Form 61A by the May 31 deadline.
   • Maintain acknowledgment receipts from submissions.

6. Documentation and Record-Keeping:

   • Keep copies of filed forms and documents for at least six years.
   • Maintain logs of filed reports and communications with tax authorities.

7. Addressing Defaults and Updates:

   • Address any notices from the Income Tax Department swiftly.
   • Keep updated on changes in tax laws and reporting requirements.

8. Staff Training and Use of Professional Services:

   • Train relevant staff on SFT requirements.
   • Engage tax professionals for compliance verification and complex transactions.

At-a-Glance Compliance Table

Checklist Item	Action/Requirement
Registration on e-filing portal	Complete initial and periodic verifications
Data collection and management	Set up systems; perform internal controls
Data preparation using DPU	Prepare and audit data; rectify discrepancies
Encryption and digital signature	Secure data files and authenticate
Timely submission	File by May 31 each year
Documentation retention	Keep records for a minimum of six years
Address defaults and legal updates	Respond to notices; update processes
Staff training and professional services	Conduct training; consult experts as needed

Conclusion

Following the compliance checklist and monitoring the thresholds for each transaction type is crucial for the entities required to file Form 61A. Diligent adherence to these guidelines will prevent legal repercussions and support the broader goal of financial transparency and tax compliance.