May 2023
Scope of Statement of Financial Transaction (SFT)
Introduction
Section 285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting persons to furnish statement of financial transaction (SFT). The SFT has to be filed by specified person electronically in Form No. 61A on or before 31st May immediately following the end of the financial year. Thus, SFT for the year ended 31st March 2023 has to be furnished on or before 31st May 2023.
Reporting of Specified Transactions
The Statement of Financial Transaction (SFT) is required to be furnished in respect of following specified transactions undertaken during a financial year by the specified persons:
|
Sr. No. |
Nature of Transaction |
Monetary Limits |
Reporting Person |
|
1 |
Receipt of cash payment for sale of goods or services of any nature from a person. |
2 Lacs Per transaction |
Any person who is subject to Tax audit. |
|
2 |
Receipt from a person for issue of securities (including share application money) |
10 Lacs (In aggregate during the year) |
Any Company |
|
3 |
Buy back of shares from a person (other than shares bought in the open market) |
10 Lacs (In aggregate during the year) |
Listed Company |
|
4 |
Receipt from a person for acquisition of bonds or debentures issued by the company (other than renewal of bond or debenture) |
10 Lacs (In aggregate during the year) |
Company issuing bonds or debentures |
|
5 |
One or more time deposits (other than time deposit made through renewal of another time deposit) of a person |
10 Lacs (In aggregate during the year) |
1. Banking company 2. Co-operative bank 3. Post master general 4. Registered deposit taking NBFC 5. Nidhi Company
|
|
5 |
Dividend distributed during the financial year to every person |
- |
Any Company |
|
6 |
Interest income (other than interest income exempt from tax) paid or credited during the financial year to every person |
- |
6. Banking company 7. Co-operative bank 8. Post master general 9. Registered deposit taking NBFC |
|
7 |
Capital Gains on transfer of Listed securities or Units of Mutual Fund |
- |
1. Recognised Stock exchange and Clearing Corporation 2. Depository 3.Registrar (registered under SEBI) |
Apart from the above-mentioned transactions, there are many other transactions covered under Rule 114E that need to be reported in Form No. 61A by specified persons such as Banking Companies, Post Master General, Nidhi Companies, Trustee of Mutual Funds, Authorized Person under FEMA, NBFCs, etc., based on specified monetary limits.
Consequences in case of failure to furnish SFT
If a person fails to furnish the specified statement, penalty of Rs.500 per day of default will be levied.
However, if the assessee receives any notice from the department for filing the statement, then it must be filed within the limit of 30 days from the date of service of notice. In case of any default in filing the statement in response to such notice, the penalty shall be Rs.1,000 per day of default.
If a person furnishes inaccurate particulars in SFT, a penalty of Rs.50,000 could be charged.
Comments
The advancement in technology has resulted in bringing more and more compliance responsibilities to the taxpayer who cannot afford to ignore the above provisions as there are severe consequences in case of failure to report the transactions and also in case of furnishing incorrect information. So keeping all these things in mind, tax payers need to ensure that the SFT return is filed within the prescribed due date and details are properly furnished.
MODES FOR INVESTMENT OF DONATION RECEIVED BY CHARITABLE ENTITIES:
INTRODUCTION
In India, charitable entities play a vital role in addressing various social issues and uplifting the less privileged members of society. To support their noble causes, individuals and organizations often contribute generous donations. However, it is essential to ensure that these donations are utilized effectively and prudently. The Income Tax Act of India provides guidelines regarding the investment of such donations, ensuring transparency and accountability in the utilization of funds.
SPECIFIED MODES OF INVESTMENT
Accordingly, amount of donations received/accumulated by way of:
Corpus Donation
General Donation
Accumulation u/s 11(2)
Statutory Accumulation of 15%
Any other donation/income
Has to be invested in one of the following modes:
Post Office Savings Bank
Any Scheduled Bank
Cooperative Society Engaged in Carrying on Business of Banking
Units of Unit Trust of India
Savings Certificate
Any Security for Money Created and Issued by Central/State Government
Debentures of Company/Corporation, where Principal and Interest are Wholly and Unconditionally Guaranteed by Central/State Government
Investment/Deposit in any Public Sector Company
Deposits with IDBI
Immovable Property (Plant & Machinery is not covered here unless, installed for convenient operation of building, i.e., Elevators, Parking Lifts, etc.)
Mutual Funds:
Registered under SEBI; or,
Set up by Public Sector Banks or Public Financial Institution; or,
Authorized by RBI.
Deposits made with an authority constituted in India by or under any law enacted for the purpose of:
Dealing with and Satisfying the Need for Housing Accommodation; or,
Planning, Development or Improvement of Cities, Towns and Villages; or,
For Both
Shares of National Skill Development Corporation
Debt Instruments Issued by Infrastructure Finance Company registered with RBI
Deposits with/Investment in any bonds issued by
Financial Corporation
Engaged in providing long term finance for industrial development in India.
Public Company (Formed and Registered in India)
With Main Object of Carrying on Business of Providing Long Term Finance for:
Construction/Purchase of Houses in India for Residential Purposes
Urban Infrastructure in India
Implications of Investments not done in the above Specified Modes:
Donations received as Corpus must be invested in one of the specified modes of investment to claim such donations as Corpus.
In order to accumulate income under Section 11(2) for 5 years, it is a condition to deposit the same in one of the specified modes of investment within 6 months from the end of the financial year in which they were received.
According to Section 13, if any asset is held otherwise than in any of the specified modes of investment after the expiry of one year from the end of the previous year in while such asset is acquired, it will be liable to tax.
By adhering to the guidelines outlined in the Income Tax Act of India, charitable entities can ensure responsible investment of donations, thereby upholding the trust of donors and contributing to the overall well-being of society.
MCA AMENDS RULES FOR VOLUNTARY WINDING UP OF COMPANIES
Ministry of corporate affairs (MCA) with the intention of speeding up Voluntary Winding of Companies has recently set up a centralized unit at the Indian Institute of Corporate Affairs in Gurgaon called C-Pace i.e. Centre for Processing Accelerated Corporate Exit. Further to make this unit operational, Rules for winding up has been amended and this Article attempts to cover Original and Amended Rules in summarised manner.
C-PACE –CENTRE FOR PROCESSING ACCELERATED CORPORATE EXIT
C-PACE will now be centralized place for all voluntary winding application by corporates which earlier were addressed to respective Registrar of Companies of states in which Registered Office are situated. C-Pace has re-engineered the process of Corporate Exit and as claimed by MCA will reduce the time for winding up to about 2 months as compared to six months to two years taken earlier.
From 1st Mary, 2023 if any corporate wants to voluntarily wind up then it has do the following:
Prerequisites before making application for wind up in Form STK-2:
Members Approval by passing Special Resolution and filing of Form MGT-14
Prior Approval of RBI, IRDA, NHB, SEBI and other similar Authorities, If Corporate entity is also registered with such Regulatory Authorities
All charge on assets of companies to be satisfied / closed.
Annual Forms i.e. AOC-4 for Financial Statements and MGT-7 / 7A for Annual Returns for all the years till business was carried on to be filed.
Details / Documents to be filed with Form STK-2:
An indemnity bond duly notarized, by every director in Form STK 3.
Statement of accounts in Form No. STK-8 with NIL Assets and Liabilities upto the date which is not more than thirty days before the date of application and certified by a Chartered Accountant.
An affidavit in Form STK 4 by every director of the company.
A statement regarding pending litigations, if any, involving the company.
Service Request Number of the Form MGT-14 filed for the Special Resolution passed.
ROC Filing Fees of Rs.10000/- to be paid on filing of Form STK-2
Following companies cannot avail this rule for winding up:
Listed Companies / Companies delisted due to non-compliance of listing regulations.
Vanishing Companies.
Companies under investigation or Inspection and pending in Court.
Companies having pending compounding applications with competent authorities.
Companies having outstanding deposits or have defaulted in repayment
Section 8 Companies i.e. Company incorporated for Not for Profit / Charity.
Let us hope this dedicated unit for speedy winding up of Corporates achieve its desire purpose and effort of Government for ease of doing Business in India.
