CBDT has vide notification no. 01/2023 Dt. 05.01.2023 removed any limit for filing SFT report u/s 285A of the Income tax act from Rs. 5000 to Rs. 0. Hence, now the entity needs to report each and every party to whom interest is paid in SFT. Relevant extract of notification is as under:
“Section 285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting persons to furnish statement of financial transaction (SFT). For the purposes of prefilling the return of income, CBDT has issued Notification No. 16/2021 dated 12.03.2021 to include reporting of information relating to interest income. The Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Interest income was notified via Notification 2 of 2021 dated 20th April 2021.
2. As per sub-rule (4)(b) of Rule 114E Director General of Income-tax (Systems) shall specify the procedures, data structures and standards for ensuring secure capture and transmission of data, evolving and implementing appropriate security, archival and retrieval policies.
3. The Remarks column point 1 at Annexure A– Guidelines for Preparation of Statement of Financial Transactions (SFT) mentioned “The information is to be reported for all account/deposit holders where cumulative interest exceeds Rs 5,000/- per person in the financial year.
4. The Remarks column at Annexure A is hereby being modified and may be read as ~ The information is to be reported for all account/deposit holders where any interest exceeds zero per account in the financial year excluding Jan Dhan Accounts”.
5. In the view of the changes mentioned above, the limit prescribed in Notification 2 of 2021 dated 201h April 2021 stands abolished and this addendum will come into effect from 05/01/2023.”
As per instructions issued by CBDT the below mentioned people are required to make SFT reporting for interest paid:
(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) of section 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.
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