Statement of financial transactions is sought to prevent tax evasion.
In this, the Income Tax Department matches the income and expenses of the taxpayers.
Income Tax Department also asks for information by giving a notice if a difference is found.
Income Tax: The Income Tax Department is continuously improving the system to prevent tax evasion. Now the IT department is keeping an eye on people’s income and expenses in new ways. Therefore, if you pay tax, then it is necessary to have coordination between your income, expenditure and tax payment. If any difference is found in any of these three methods, then statement of financial transaction (SFT) Through this the Income Tax Department will catch this theft of yours.
If you get huge interest from bank FD or savings scheme, you do big cash transaction from bank, heavy shopping with credit card including profits from shares and mutual funds will come under the eye of income tax department. The special thing is that even if you do not give this information to the Income Tax Department, but the IT Department will get a clue about it, let us know how?
read this also- IT department has extended the date for filing SFT return, still this work is not done, then a fine of Rs 1000 will be imposed daily
What is SFT
For the purpose of preventing tax evasion, a system like Statement of Financial Transaction has been implemented. According to investment and tax advisor Balwant Jain, through this the Income Tax Department matches the income and expenses of taxpayers. During this, if any kind of difference is found, the department immediately catches it.
Through this system, the Income Tax Department collects information whether any taxpayer is hiding any kind of information. That’s why the Income Tax Department is keeping an eye not only on the income but also on the expenses. In such a situation, if less income and more expenditure is shown, then the IT department immediately serves the notice. If the taxpayers do not give the correct answer regarding their expenses, then they have to pay tax along with penalty and interest considering it as undisclosed income.
These transactions will come under the ambit of SFT
- Cash or deposit more than 10 lakh in savings bank account, withdrawal or deposit of more than 50 lakh from current account
- Payment of more than 1 lakh through bank FD and credit card of more than 10 lakh
- Investment in mutual funds, bonds, shares or debentures transactions above 10 lakhs
- For foreign exchange transactions above Rs 10 lakh through credit or currency cards
How will the Income Tax Department know?
The special thing is that under SFT, the details of all these high value transactions are given by financial institutions including banks in Form 61A, which contains the accounts of the last financial year.
Banks, non-banking financial companies, post offices, mutual fund houses, companies issuing bonds and shares, registrars of property and foreign exchange dealers have to file SFT every year. If any institute does not submit SFT on time, then penalty and fine have to be paid on daily basis.
Tags: cbdt, income tax department, income tax planning, income tax return
FIRST PUBLISHED : June 03, 2023, 17:15 IST