SFT Update

[CA Raj Chawla]

Respected Members,

Quotes of the day;

1.     A mistake that makes you humble is better than an achievement that makes you arrogant.

 

2.     Don't ever Give Up. The Beginning of the Path to SUCCESS is always the Hardest. Life Rewards those who WORK HARD for it. Remember FAIL is nothing but First Attempt In Learning.

SFT Update;

 

1.     SFT Filing Deadline Looms: 31 May 2026 Compliance Warning for Banks, Financial Institutions, and Registrars. Here is all the key information about the SFT update and deadline:

 

2.     SFT = Statement of Financial Transactions, filed under Section 285BA of the Income-tax Act, 1961 

a)     Who files: Banks, co-operative banks, mutual funds, financial institutions, companies, property registrars, and other specified entities 

b)     Form used: Form 61A for general entities, filed electronically with digital signature ea15

c)     Due date: On or before 31 May 2026 for FY 2025-26 transactions 

 

3.     What must be reported

SFT covers high-value specified transactions, including:

a)     Mutual fund investments 

b)     Securities transactions

c)     Property transactions

d)     Credit card payments over threshold

e)     Large cash deposits and fixed deposits

f)      Large banking transactions

g)     Interest income

h)     Capital gains transactions

 

4.     CBDT’s directive for May 31, 2026:

·       CBDT has asked all reporting entities to complete accurate SFT filings before the May 31, 2026 deadline. The data feeds directly into the taxpayer's Annual Information Statement (AIS) linked to PAN. 

 

5.     Critical errors to avoid:

The notice warns against these mistakes that trigger 148A notices and proceedings under section 148, even if transactions < INR 50L:

a)     Wrong PAN- incorrect or missing PAN details 

b)     Duplicate transactions 

c)     Double counting in joint accounts- inaccurate values in joint accounts 54d0

d)     Double reporting- Same property transaction reported by both Registrar and Income Tax 

 

6.     CBDT also flagged: non-aggregation of accounts across branches, incorrect date formats, non-reporting of Form 60 cases, weak internal reconciliation, and lack of quality checks. 

 

7.     Consequences of non-compliance:

a)     Penalty for delay: Rs 500 per day from due date. If you still don’t file after receiving notice, Rs 1,000 per day from expiry of notice period 

b)     Defective SFT: Income Tax Dept will intimate defects. You get 30 days to rectify. If not fixed, SFT treated as invalid 

c)     For taxpayers: Inaccurate SFT causes AIS mismatches leading to mismatch notices, denial of TDS credit, refund delays, tax demands, rectification, and revised returns 

d)     For filers: As per the notice, errors will cause service of *148A Notices* and unnecessary assessment proceedings under section 148 after 3 years*, even for transactions below INR 50L. 

 

 

8.     Until SFTs are filed and processed, AIS may not fully capture reportable financial activities. Early ITR filing before May 31 risks mismatches because salary TDS via Form 24Q and non-salary TDS via Form 26Q are also due May 31, 2026. 

 

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With best regards

CA (Dr) Raj Chawla

B.Com (Hons), FCA, FCS, FCMA, LLB 

MIMA, DISA, MICA, Phd, ASA (Aust), CMP (USA)

712, New Delhi House

27,Barakhamba Road, New Delhi-110001

Ph. Off. 011-43581083

Cell: 98110-81083

rajch...@gmail.com