In our earlier post we had mentioned that CBDT has introduced new transactions under SFT (Specified Financial Transaction) i.e. reporting on interest income, dividend income and capital gain income so that people get pre-filled Income tax returns.
Now, CBDT has issued instructions related to same and mentioned that in the instruction notification that will help people in getting pre-filled Income tax return.
For Dividend Income:
Notification No. 1 of 2021 deals with submission of details about Dividend in SFT. CBDT had introduced new sub rule 5A of rule 114E which specifies that the information shall be furnished in such form, at such frequency, and in such manner, as may be specified by the Director General of Income Tax (Systems), with the approval of the Board.
Now, vide the above notification CBDT has specified the manner and frequency i.e. guidelines for the above form.
The statement of financial transactions shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded.
The data files are required to be uploaded at the reporting portal through the login credentials (PAN and password) of the designated director.
The statement of financial transaction shall be signed, verified and furnished by the specified Designated Director.
CBDT has also issued new SFT code to above transaction mentioned as under: (To know about other SFT codes CLICK HERE)
| Transaction code | SFT-015 |
| Transaction description | Dividend Income |
| Nature and value of transaction | Dividend Distributed during the year |
| Class of person required to furnish | A company paying dividend |
| Remarks | 1. The information is to be reported for all dividend distributed during the financial year.
2. One report would include details of dividend payment to one person. 3. Dividend will be the total amount of dividend distributed during the financial year. |
This is an annual reporting and there is no minimum limit for this reporting and hence any amount paid as a dividend needs to be reported in the SFT. Procedure for filing is same as for any other SFT transaction.
To read full instruction in detail CLICK HERE.
For Interest Income:
Notification No. 2 of 2021 deals with submission of details about Interest Paid in SFT. CBDT had introduced new sub rule 5A of rule 114E which specifies that the information shall be furnished in such form, at such frequency, and in such manner, as may be specified by the Director General of Income Tax (Systems), with the approval of the Board.
Now, vide the above notification CBDT has specified the manner and frequency i.e. guidelines for the above form.
The statement of financial transactions shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded.
The data files are required to be uploaded at the reporting portal through the login credentials (PAN and password) of the designated director.
The statement of financial transaction shall be signed, verified and furnished by the specified Designated Director.
CBDT has also issued new SFT code to above transaction mentioned as under: (To know about other SFT codes CLICK HERE)
| Transaction code | SFT-016 |
| Transaction description | Interest Income |
| Nature and value of transaction | Interest paid/credited during the financial year. |
| Class of person required to furnish | (i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in clause (j) ofsection 2 of the Indian Post Office Act, 1898 (6 of 1898). (iii) Nonbanking financial company which holds a certificate of registration under section 45IA of the Reserve Bank of India Act, 1934 (2 of 1934), to hold or accept deposit from public |
| Remarks | 1. The information is to be reported for all account/deposit holders where cumulative interest exceeds Rs 5,000/ per person in the financial year.
2. Interest which is exempt from tax under the Incometax Act, 1961 such as interest on Public Provident Fund (PPF) Account, Foreign Currency Nonresident (FCNR) Account, Sukanya Samriddhi Account, Resident Foreign Currency Account etc. need not be reported. 3. While reporting the interest amount, deduction of Rs. 10,000/ available under section 80TTA should not be reduced from interest amount paid/credited. 4. In case of joint account, the interest paid/credited should be assigned to the first/primary account holder or specified assigned person as per Form 37BA. 5. In case of minor being the account holder, the information to be reported in the name of Legal Guardian. 6. Separate report is required to be submitted for each account type (i.e. S-Savings, T-Time Deposit, R-Recurring Deposit, O-Others) and Interest on same account type is required to be aggregated in the report. 7. Interest will be the total amount of Interest paid/credited during the financial year. |
It is good to see that atleast 5,000 limit has been provided by government for reporting in SFT and only banks and specified financial institutions are required to comply with the requirement.
Also, this would solve some issues wherein people forget to mention interest income in Income tax return as was seen in FY 2019-20 which lead to people receiving High value transaction notice.
To read full instructions CLICK HERE.
Let’s hope after this steps and getting pre-filled income tax return people will get fewer notices and better Income tax reporting can be done.
However, still instructions for depository for reporting capital gain income is pending.
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