Direct Tax Advisory
Reporting of Special Financial Transactions
May 28, 2024
- In India, the Special Financial Transaction (SFT) is a regulatory measure designed to monitor high-value transactions and ensure better tax compliances. For the monitoring, Income Tax Act requires specified entities to report certain transactions exceeding a specified threshold to the Income Tax Department on designated portal. The SFT aims to reduce tax evasion and improve the transparency of financial activities.
- Section 285BA of the Income Tax Act, 1961 requires the following transactions to be reported by the taxpayers:
- Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring bonds or debentures issued by the company or institution.
- Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring shares (including share application money) issued by the company.
- Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to ten lakh rupees or more in a financial year.
- Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature.
- Divided income earned by any company.
- MBG can assist in this scenario in following ways:
- Assisting in identification of specified transaction that needs to be reported.
- Assisting in preparation and filing of relevant forms for reporting of SFT through our Financial Reporting Support services.