This article is written by Satyaki Deb, an LL.M. (IP) candidate from the Rajiv Gandhi School of Intellectual Property Law, IIT Kharagpur. This article provides an exhaustive overview of Form 61A of Income Tax Rules, 1962 and its related concepts from an analytical viewpoint.

It has been published by Rachit Garg.

Introduction

In a country like India, where a very small percentage of the population pays taxes and people are getting used to the stench of black money, it becomes very important for the government to keep track of high-value transactions in order to widen the tax base and reduce black money. Thus, for this purpose, the concept of ‘Annual Information Return (AIR)’ (w.e.f. 01.04.2004) was introduced to track high-value transactions of individuals. Later, by the Finance Act 2014, amendments were made and the concept of ‘Specified Financial Transactions (SFTs)’ was introduced as a replacement for the ‘Annual Information Return’. So, Form 61A is the form that individuals specified under Section 285BA of the Income Tax Act, 1961, read with Rule 114E of the Income Tax Rules, 1962, need to file showcasing the high-value financial transactions or SFTs they have made in the previous financial year. This article will attempt to analyse the horizons of this tremendously significant Form 61A.

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What is Form 61A of Income Tax Rules, 1962

So, as depicted in the above flowchart, Form 61A finds its mention in Rule 114E of the Income Tax Rules, 1962 and envisages the formats and instructions specified in Section 285BA of the Income Tax Act, 1961, read with Rule 114E, that individuals need to comply with and file in a timely manner. The specified individuals undertaking high-value transactions in the previous financial year mentioned in the preceding provisions need to fill out Form 61A and file it by 31st May of the next assessment year. In other words, Form 61A needs to be filed by 31st May of the year immediately following the year in which the specified financial transactions were undertaken. Failure to comply with the due date for Form 61A filing may cause one to be served with a notice by the tax authorities vide sub-section (5) of Section 285BA. Such notice usually gives a grace time frame of maximum thirty days and he or she needs to file the Form 61A within such specified time limit.

Different parts of Form 61A of Income Tax Rules, 1962

Form 61A of the Income Tax Rules, 1962 consists of four parts, namely: Part A, Part B, Part C and Part D. But in effect, there are actually two parts, viz- Part A that contains statement details and Parts B, C or D that contain report details. The specified user needs to fill up Part A and either of Parts B, C or D as per applicability. The various parts of Form 61A are briefly mentioned below:

  • Part A: This part consists of the ‘Statement Details’ that are the same for all specified financial transactions. All specified individuals that need to file Form 61A need to fill up this part.
  • Part B: This part contains the ‘Report Details for Aggregated Financial Transactions’.
  • Part C: This part contains the ‘Report Details for Bank/Post Office Account’.
  • Part D:  This part contains the ‘Report Details for Immovable Property Transactions’.

The important components of this form are mentioned below:

  • Full name
  • Folio number
  • Address
  • PAN
  • Financial year (year of transaction)
  • Details of transactions
  • Number and value of Specified Financial Transactions (SFTs).

Who is required to file Form 61A of Income Tax Rules, 1962

Section 285BA(1) of the Income Tax Act, 1962, envisages the specified individuals that need to file Form 61A in accordance with Rule 114E of the Income Tax Rules, 1962. There are twelve categories of specified individuals who need to file this Form 61A. They are as follows:

  1. An individual assessee [vide Clause (a) of subsection (1) to Section 285BA].
  2. The prescribed government official [vide Clause (b) of subsection (1) to Section 285BA].
  3. Any local authority or any other public body or association [vide Clause (c) of subsection (1) to Section 285BA].
  4. The Registrar or Sub-Registrar [vide Section 6 of the Registration Act, 1908, read with Clause (d) of subsection (1) to Section 285BA].
  5. The Registering Authority who is empowered under Chapter IV of the Motor Vehicles Act, 1988 to register motor vehicles. [vide Clause (e) of subsection (1) to Section 285BA].
  6. The Post Master General [vide Section 2(j) of the Indian Post Office Act, 1898 read with Clause (f) of subsection (1) to Section 285BA].
  7. The Collector [vide Section 3(g) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 read with Clause (g) of subsection (1) to Section 285BA].
  8. The recognised stock exchanges [vide Section (2)(f) of the Securities Contract (Regulations) Act, 1956 read with Clause (h) of subsection (1) to Section 285BA].
  9. Any officer of the Reserve Bank of India [vide Section 3 of the Reserve Bank of India Act, 1934 read with Clause (i) of subsection (1) to Section 285BA].
  10.  A depository [vide Section (2)(1)(e) of the Depositories Act, 1996 read with Clause (j) of subsection (1) to Section 285BA].
  11. A prescribed ‘Reporting Financial Institution’ (RFI) [vide Rule 114F(7) of the Income Tax Rules, 1962 read with Clause (k) of subsection (1) to Section 285BA].
  12. Any other person other than the persons mentioned in the above clauses may be specified from time to time too [vide Clause (l) of subsection (1) to Section 285BA].

What are the specified transactions that need to be filed through Form 61A as per Rule 114E of the Income Tax Rules, 1962

Rule 114E of the Income Tax Rules, 1962 specifies the list of transactions that need to be reported through Form 61A. They are listed in a simplified manner as follows:

Sl. No.Specified transactions Persons who need to file Form 61A
Cash payments via bank drafts, pay orders or bankers cheque for Rs ten lakhs or more as an aggregate amount in one financial year.Cash payments amounting to Rs ten lakhs or more for the buying of RBI issued pre-paid instruments in one financial year.All cash deposits or cash withdrawals in or from a person’s current account(s) amounting to Rs fifty lakhs or more in one financial year.A banking company or cooperative bank within the meaning of the full text of the Banking Regulation Act, 1949.
Cash deposits into a person’s bank account which is not in the nature of a current account or time deposit account and amount to a total of Rs ten lakhs or more in one financial year.A banking company or cooperative bank within the meaning of the full text of the Banking Regulation Act, 1949.A Post Master General within the meaning of Section 2(j) of the Indian Post Office Act, 1898.
Any time deposit amounting to Rs ten lakhs or more in a financial year that is not a time deposit made through renewal of another time deposit.A banking company or cooperative bank within the meaning of the full text of the Banking Regulation Act, 1949.A Post Master General within the meaning of Section 2(j) of the Indian Post Office Act, 1898.A Nidhi company or a mutual benefit company within the meaning of Section 406 of the Companies Act, 2013.A non banking financial company (NBFC) registered under Section 45-IA of the Reserve Bank of India Act, 1934. 
All credit card bill payments in cash of a person in a financial year amounting to Rs one lakh or more.All credit card bill payments of a person amounting to Rs ten lakhs or more by any other modes (other than cash) in one financial year.Any banking company or cooperative bank within the meaning of the full text of the Banking Regulation Act, 1949, or any other credit card issuing company or institution. 
In one financial year, any amount received from a person aggregating to Rs ten lakhs or more for acquiring bonds and debentures other than such amount required for renewal of the bonds or debentures of the issuing company or institution. Any company or institution that issues bonds or debentures. 
In one financial year, any amount received from a person aggregating to Rs ten lakhs or more for acquiring shares of any company (including the share application money).Any company that issues shares.
In one financial year, any buyback of shares by any person other than from the open market amounting to Rs ten lakhs or more.Any company  that is listed on any recognised stock exchange that purchases back its own shares vide Section 68 of the Companies Act, 2013.
Purchase of units of mutual fund(s) worth Rs ten lakhs or more in one financial year by any person other than the amounts transferred from one scheme to another of that mutual fund.A trustee of such mutual fund or any such manager duly authorised by the trustee in this regard.
Sale of foreign currency through foreign exchange cards, debit cards, credit cards, travellers cheques, drafts or any other instruments issued to a person including credit and/or expenses via such instruments amounting to Rs ten lakhs or more in one financial year.Any authorised person within the meaning of Section 2(c) of the Foreign Exchange Management Act, 1999.
Any purchase or sale of immovable property worth Rs thirty lakhs or more or so valued by the stamp valuation authority vide Section 50C of the Income Tax Act, 1961 by a person in one financial year.Inspector General within the meaning of Section 3 of the Registration Act, 1908.Registrar or sub-registrar within the meaning of Section 6 of the Registration Act, 1908.
Any sale of goods or services of any nature worth Rs two lakhs or more by cash payment by any persons other than those mentioned above.All persons whose accounts are to be audited under Section 44AB of the Income Tax Act, 1961.

Aggregation rule for the purpose of Form 61A of Income Tax Rules, 1962

Transactions occur in steps and are spread across a time frame most of the time. In this regard, the above table shows us clearly that for the purposes of computing if a certain transaction falls under the ambit of a specified financial transaction that warrants a Form 61A filing under Rule 114E, we need to know how such aggregation needs to be done. The aggregation rule for the same is briefly mentioned below and is to be followed by the reporting authorities mentioned in the right hand column of the above table, viz:

  • At the outset, let us lay down the scope of this aggregation rule. This rule is applicable to all transaction types except ‘purchase and sale of immovable property’ and  ‘cash payment for goods and services’.
  • All accounts of similar nature under one person in one financial year are to be considered for aggregating and checking if the minimum threshold limit for SFTs has been reached or not.
  • All transactions of the same nature done by one person in one financial year are to be considered for the purposes of aggregation.
  • In such cases where the accounts under consideration are held by multiple persons or transactions are on record by more than one person, then all the added value of the transactions of all such persons, that is the entire value of such transactions are to be considered for aggregation.

For example: Mr. X bought shares worth Rs four lakhs in May of a financial year and again bought some other shares worth Rs seven lakhs in December of the same financial year. Here, both these transactions will be clubbed or aggregated to  see if the threshold of Rs ten lakhs have been breached or not. So, in this case, Mr. X’s transactions qualify under SFTs. 

Reporting entity who needs to file Form 61A of Income Tax Rules, 1962

The concept of reporting entities under the income tax laws of India is not small. In relation to Form 61A, it can be simply stated that those who are mentioned in the right hand column of the above-mentioned table or the table provided in Rule 114E of the Income Tax Rules, 1962 are the reporting entities. In other words, they are the entities that need to report the SFTs to the Income Tax Department by timely and properly filing Form 61A.

How to file Form 61A of Income Tax Rules, 1962

Form 61A can be filed in the following simple steps. They are laid down as below:

  1. Visit the Reporting Portal of the Income Tax Department, Government of India.
  2. If you are a first time reporting authority filing Form 61A, register yourself or else login using your user ID, PAN and password to the portal.
  3. You have kept ready the Form 61A in zip format along with a signature file.
  4. Now, go to the e-file option and simply upload your filled Form 61A.
  5. Your credentials like the PAN of the reporting entity, reporting entity category etc. will be displayed on your screen.
  6. Post successful validation, a message will pop up on the screen confirming the upload status of your Form 61A.

How to view Form 61A of Income Tax Rules, 1962

After filing Form 61A, you will definitely want to find the status of the same. The following simple steps will show you how you can view your filed Form 61A:

  • Visit this efiling portal of the Income Tax Department, Government of India.
  • Login to your account using your user ID, PAN number and password.
  • After successful login, go to ‘My Accounts’ and click on ‘View Form 61A’.
  • Select ‘Assessment Year and Filing Status’ and click on ‘View Details’.
  • Check against the ‘Filing Status’ field. This will show the status of your Form 61A and will read as ‘Uploaded’, ‘Accepted’ or ‘Rejected’. But kindly note that the updated status appears 24 hours after the form has been uploaded.

Consequence of non-compliance with Form 61A of Income Tax Rules, 1962

Section 271FA of the Income Tax Act, 1961, prescribes the penalties or the consequences of not complying with Rule 114E’s Form 61A filing. They are briefly stated as follows:

  • Penalty of Rs 100 per day will be levied for every defaulting day.
  • Penalty of Rs 500 per day will be levied for every day of non-compliance with the notice calling for return.
  • Penalty of Rs 1000 per day for every day of default to comply with a notice served under Section 285BA(5) wherein a maximum of thirty days may be given to comply.

Moreover, one needs to be extremely cautious while filing Form 61A as any inaccurate information filed will attract a penalty of Rs 50,000 vide Section 271FAA of the Income Tax Act, 1961.

Recent case law relating to Form 61A of Income Tax Rules, 1962

The Tirupati Co-Operative Bank vs. Director Of Income Tax (I&Ci), (Income Tax Appellate Tribunal, Hyderabad, 2019)

Here, in this case, the income tax authorities had levied penalties upon the assessee who was the reporting party. The penalties were levied under Section 271FA of the Income Tax Act, 1961, for failure to file Form 61A under Rule 114E of the Income Tax Rules, 1962. So, the question of law that inter alia arose was if non-wilful failure to file Form 61A can be condoned or not. After a thorough perusal of the full matter, it was held that since the assessee was a cooperative bank that was undergoing computer modernization (at the time of failure) which subsequently led to the failure of the Form 61A filing, the assessee had not committed willful default and thus should not be penalised.

Conclusion

With the increase of corruption and hoarding of black money in India, compliance with Form 61A of the Income Tax Act, 1961 has become stricter in nature. So, due care and caution are necessary for Form 61A filing. In the light of this, it is direly urged to all reporting parties that they duly report all specified transactions under Rule 114E via Form 61A. Form 61A is a weapon against people who avoid taxes, and the concerned reporting authorities must do their due part to increase transparency in the system by timely and properly filing this Form 61A.

Frequently asked questions (FAQs)

What is the remedy for a person who realises after filing Form 61A that some incorrect information has been filed?

In this circumstance, such a person must contact the prescribed income tax authority within a period of ten days vide Section 285BA(6) of the Income Tax Act, 1961, and furnish the correct information in the prescribed manner. Also, if the income tax authority notices the incorrectness first, a notice may be served upon such person asking him to furnish correct information within a period of thirty days from the date of such intimation or within such extended time as permitted by the concerned income tax authority. Failure to rectify despite all these will be considered as furnishing incorrect information and will attract penalties under Section 271FAA of the Income Tax Act, 1961.

Is there any specific mode for filing Form 61A of the Income Tax Rules, 1962?

The SFTs should be submitted electronically and filled in Form 61A under digital signature. In other words, the only permitted mode is e-filing. Only in cases of a Postmaster General, Inspector General, or Registrar, submission of Form 61A in CD or DVD form that is via computer readable media is permitted along with verification in Form V on paper.

Is there any difference between Specified Financial Transaction (SFT) and Annual Information Return (AIR)?

No, there is no difference between SFT and AIR. AIR is just the old term previously used to indicate high-value transactions that needed to be reported. Now, it has been replaced by the term specified financial transactions under Section 285BA of the Income Tax Act, 1961.

References

  1. https://www.incometaxindia.gov.in/pages/indiacode/income-tax-act.aspx
  2. https://incometaxindia.gov.in/Pages/rules/income-tax-rules-1962.aspx 
  3. https://www.incometax.gov.in/iec/foportal 

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