Tuesday, May 6, 2025

Professional Analysis: Form 61A - Income Tax: Applicability, Due Date & Filing Process

Under Section 285BA of the Income Tax Act, the Statement of Financial Transactions (SFT), formerly known as the Annual Information Return (AIR), mandates certain entities to report high-value financial transactions to the Income Tax Department. This reporting is crucial to ensuring the monitoring of high-value transactions and improving tax compliance.

Entities & Transactions Covered

Form 61A must be filed by the following specified persons in relation to the specified transactions:

  1. Financial Institutions:

    • Banking companies, co-operative banks, and Non-Banking Financial Companies (NBFCs).

    • Post Offices and entities issuing credit cards.

    • Entities issuing shares, debentures, or bonds.

  2. Real Estate:

    • Registrar/Sub-Registrar for immovable property transactions exceeding ₹30 lakh.

  3. Entities Under Tax Audit:

    • Persons subject to audit under Section 44AB of the Income Tax Act.

Specified Financial Transactions

The following high-value transactions must be reported:

  • Banking Transactions:

    • Deposits/withdrawals of ₹50 lakh or more in any current account.

    • Cash payments exceeding ₹10 lakh for instruments like Pay Orders (POs) or Demand Drafts (DDs).

  • Property Transactions:

    • Sale or purchase of immovable property valued ₹30 lakh or more.

  • Investments:

    • Payments exceeding ₹10 lakh for acquiring shares, bonds, or mutual fund units.

  • Other Financial Transactions:

    • Cash transactions aggregating to ₹1 lakh or more for credit card bills.

Due Date for Filing

The due date for filing Form 61A is 31st May following the end of the financial year. For FY 2024-25, the filing deadline is 31st May 2025.

Failure to comply with the filing requirements results in penalties:

  • ₹500 per day for an initial delay.

  • ₹1000 per day if the non-compliance continues after notice from the authorities.

Who is Required to File Form 61A?

Entities required to file include:

  • Banks, NBFCs, Post Offices: For transactions like large cash deposits or withdrawals exceeding specified thresholds.

  • Real Estate: Sale or purchase of immovable property valued over ₹30 lakh.

  • Entities Under Section 44AB Audit: For receipt of cash payments exceeding ₹2 lakh in connection with sales or services.

Nil Statement Filing

There is no explicit requirement to file a Nil Form 61A if no reportable transactions have occurred. However, it is advisable to file a Nil statement to ensure compliance and avoid potential issues with the tax authorities.

Filing Process for Form 61A

  1. Portal Registration: The first step is to register on the Income Tax Reporting Portal.

  2. Prepare the XML File: The statement must be prepared in XML format, consistent with the schema prescribed by the Income Tax Department.

  3. Sign and Encrypt: Once the XML is generated, it must be signed and encrypted using the prescribed utility.

  4. Upload the Statement: The encrypted XML file must then be uploaded on the portal. A successful submission will generate an Acknowledgment Number, which will be sent to the registered email.

Components of Form 61A

  • Part A: Contains statement-level details applicable for all types of transactions.

  • Part B: Reports aggregated financial transactions by the reporting person.

  • Part C: Details bank account information.

  • Part D: Covers immovable property transactions.

Aggregation of Transactions

  • Threshold Calculation: The threshold limit applies to the aggregate amount across similar transactions or accounts.

  • Joint Accounts: For joint accounts, the aggregate amount is split equally among all account holders.

  • Exceptions: Specific rules apply to the purchase/sale of immovable properties and cash transactions for goods or services.

Conclusion

Filing Form 61A is an essential compliance requirement for entities engaged in significant financial transactions. Accurate and timely filing ensures adherence to the provisions of the Income Tax Act and avoids the imposition of penalties. Given the complexities of financial reporting, entities must be diligent in understanding the rules and filing requirements to remain compliant with tax regulations.