In this Era of Latest Technology, it is not hard for the Income Tax Department to have a look on the Financial Non-Cash Transactions entered by anybody whether in India or Outside India.

CBDT has issued circular to various entities who let you do the financial transactions i.e. Financial Institutions such as Banks, NBFC’s, Post Offices to provide the details regarding Capital Gains transactions, interest and dividend income of the Tax Payers.

The Financial Transactions that will be reported by these entities to Income Tax Department are the transactions governed by section 285BA of Income Tax Act, 1961. This section provide some notified transactions with their nature and threshold limit related to a particular taxpayer.

By Issuing a Notification Dated: 12 March, 2021, Department of Income tax added another Transaction Code SFT – 016 which will lead more disclosure by the Banking Companies towards Income Tax Department regarding Saving Interest (as Fixed Deposit (FD) interest was already tracked by income tax department through FORM-26AS as TDS is being deducted on FD interest). Information will be reported by Banking Institution to Income tax department if any Person Receive Saving Interest in one or more bank accounts of Rs. 5000 or more in a F.Y.

Following are the “Specified Transactions” that are reported to income tax authorities by the specified entities in Case of Individuals (Transactions that will not affect Individuals are not mentioned in this article):

1. SFT– 001-Cash Payment Aggregating 10 Lakhs or More made in a Financial Year for Purchase of Bank Drafts or Pay Orders or Banker’s Cheque then that Banking Company or a Cooperative Bank will report such transaction to Income Tax Department.
2. Cash Deposits Aggregating 10 Lakhs or More in a F.Y. in one or more Saving Accounts will be reported by that bank to Income Tax Department.
3. One or More Time Deposits Aggregating 10 Lakhs or More in a F.Y.
4. Payments made for Credit Card bill in a F.Y. for 1 Lakh or more in Cash or 10 Lakhs or more by any mode other than cash.
5. Amount Received Aggregating 10 Lakhs or More during a F.Y. from any person for sale of foreign currency including any credit of such currency to foreign

exchange card or expense in such currency through a debit or credit card or through issue of traveler cheque or draft or through any other instrument.

6. Purchase or Sale of any Immovable property for Amount of 30 Lakhs or more or Valuation as Per Section 50C is Rs. 30 Lakhs or more will be reported by Registrar to Income Tax Department.
7. Receipt of Cash Payment of 2 Lakhs or more for Sale of Goods or Services of any nature will be reported by that Payer who is liable for Tax Audit under section 44AB of Income tax Act to Income Tax Department.
8. Receipt of Interest of Rs. 5000 or more in a F.Y. in one or more account of any person will be reported by the Banking Institution to income tax department and will be reflected in the Compliance portal of Income

Although Interest which is exempt from tax such as Interest on PPF, FCNR etc will not be reported. Also while reporting the interest amount the deduction of Rs. 10000/- available under section 80TTA should be reduced from Interest amount Paid/ Credited.