With increasing digitization and real-time data collection, Section 285BA of the Income-tax Act, 1961, read with Rule 114E of the Income-tax Rules, 1962, mandates a class of taxpayers and institutions to report specified high-value financial transactions through Form 61A. This provision aims to bolster transparency, curb tax evasion, and widen the tax base through intelligent information gathering.
This article presents the most exhaustive, updated, and professional interpretation of the statutory framework, procedures, thresholds, compliance burdens, and the nexus of legal responsibility on reporting entities, with particular relevance to individuals, professionals, small businesses, corporates, auditors, and tax advisors for FY 2024–25.
1. Legal Framework: Full Text and Interpretation
Section 285BA (as per Finance Act, 2023 applicable for FY 2024–25):
“285BA. Obligation to furnish statement of financial transaction or reportable account.
(1) Any person, being—
(a) an assessee; or
(b) the prescribed person in the case of an office of Government; or
(c) a local authority or other public body or association; or
(d) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908; or
(e) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988; or
(f) the Post Master General; or
(g) the Collector referred to in clause (c) of section 3 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; or
(h) the recognized stock exchange; or
(i) a depository; or
(j) a prescribed reporting financial institution,
who is responsible for registering, maintaining, or recording such specified financial transactions or such reportable accounts as may be prescribed under any law for the time being in force, shall furnish a statement in respect of such specified financial transactions or such reportable accounts which are registered or recorded or maintained by him and information relating to which is relevant and required for the purposes of this Act.”*
Interpretation Highlights:
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Wide applicability: Extends beyond income earners to institutions and authorities maintaining transaction data.
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Mandatory reporting: For transactions above prescribed limits and reportable accounts.
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Overriding obligation: This compliance is separate and independent of income tax return filing under Section 139.
2. Procedural Law – Rule 114E of the Income Tax Rules, 1962
Rule 114E mandates the filing of Form 61A, specifying:
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Nature and value of transactions
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PAN of the transacting party
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Reporting entity details
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Timelines and validation through designated utilities
3. Reporting Tool: Form 61A
Form 61A – Statement of Financial Transactions (SFT) must be furnished electronically on the Income Tax E-Filing Portal.
Utility Shortcut:
➡ Navigate to: “e-File” > “Statement of Financial Transactions (SFT)” > Upload Form 61A
➡ Use “Report Generation and Validation Utility (RPU)” & “File Validation Utility (FVU)” from NSDL website.
4. Specified Transactions under Rule 114E: Thresholds and Responsible Entities (FY 2024–25)
| Sl. No. | Nature of Transaction | Threshold (Rs.) | Reporting Entity |
|---|---|---|---|
| 1 | Cash deposit (savings accounts) | ≥ ₹10,00,000 in a FY | Banks (Scheduled/Co-op) & Post Offices |
| 2 | Cash deposit/withdrawal (current accounts) | ≥ ₹50,00,000 in a FY | Banks (Scheduled/Co-op) |
| 3 | Purchase/sale of immovable property | ≥ ₹30,00,000 | Registrar/Sub-Registrar under Registration Act, 1908 |
| 4 | Credit card bill payment in cash | ≥ ₹1,00,000 | Banks/Co-op Banks/Other Issuers |
| 5 | Credit card bill payment (aggregate) | ≥ ₹10,00,000 | Banks/Co-op Banks/Other Issuers |
| 6 | Time deposit (single or aggregate) | ≥ ₹10,00,000 | Banks/Co-op/Post Office/NBFCs |
| 7 | Purchase of bonds or debentures | ≥ ₹10,00,000 | Companies issuing them |
| 8 | Purchase of shares | ≥ ₹10,00,000 | Companies issuing them |
| 9 | Buyback of shares | Any amount | Listed companies |
| 10 | Purchase of mutual fund units | ≥ ₹10,00,000 | Mutual Fund Companies |
| 11 | Foreign remittance under LRS | ≥ ₹10,00,000 | Authorized Dealer (Bank/FFI) |
| 12 | Sale of foreign currency (cash + card/TC) | ≥ ₹10,00,000 | Authorized Dealer (Bank/FFI) |
| 13 | Cash receipt for sale of goods/services (by any business) | ≥ ₹2,00,000 per transaction | Any Assessee under Sec. 44AB (Tax Audit Case) |
| 14 | Life insurance premium | ≥ ₹50,000 (cash), ≥ ₹1L | Insurers |
5. Entities Required to File Form 61A
Compulsorily covered entities:
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Banking Companies
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Co-operative Banks
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Post Offices
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Mutual Funds
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Registrars under Registration Act
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NBFCs & Housing Finance Companies
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Insurance Companies
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Listed Companies (for buybacks)
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AD Banks under FEMA for remittances
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Corporates issuing shares/bonds/debentures
Taxpayers (Individuals/Firms/Companies):
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If covered under tax audit u/s 44AB, cash receipts exceeding ₹2,00,000 for sale of goods or services must be reported.
6. Due Date & Verification Procedure
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Form 61A Due Date: 31st May of the assessment year following the financial year.
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Verification: Must be signed digitally using Digital Signature Certificate (DSC).
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Correction Statement: Can be submitted to rectify errors using the same utility.
7. Penalties for Non-Compliance
| Nature of Default | Applicable Section | Penalty |
|---|---|---|
| Non-filing of Form 61A | Section 271FA | ₹500/day of default (up to ₹1 lakh) |
| Inaccurate or defective filing | Section 271H | ₹10,000 to ₹1,00,000 |
| Failure to furnish PAN in transactions | Section 272B | ₹10,000 per default |
8. Critical Analysis: Challenges & Recommendations
Challenges:
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Systemic Errors in validation utility.
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Multiple records across branches and divisions.
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Complex matching of PAN-less transactions.
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SMEs’ limited digital infrastructure for compliance.
Recommendations:
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Deploy centralized compliance software for aggregation.
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Proactive tracking of high-value receipts, especially in cash.
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Ensure digital capture of PAN for every reportable transaction.
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Use Form 61B for cross-checking under CRS and FATCA.
Conclusion: Creating a Compliance-Ready Ecosystem
Section 285BA, read with Rule 114E and Form 61A, is not just a reporting requirement — it's a financial transparency enforcement tool. For professionals, tax auditors, and institutional reporters, this is a non-negotiable compliance checkpoint.
