Reporting of these transactions will help greater monitoring by the income tax
department, especially through the use of technology like artificial intelligence and machine learning.
Besides, those having bank transactions over Rs 30 lakh will have to compulsorily file income tax
return. Similarly, return filing is proposed to become mandatory for all professionals and busineses having turnover of over Rs 50 lakh and in case of rent payment above Rs 40,000.
SFT is a report of specified financial transactions
by specified persons including prescribed reporting financial institution. Such specified persons who register, maintain or record such specified financial transaction are mandated to submit SFT to the income tax department.
Earlier this year, the Income Tax department added new features in 26AS Form, which include information on high value financial transactions of assessees such as credit card payments, purchase of shares, debentures and mutual funds, cash payment for goods and services. The new variant of 26AS Form has taxpayers' details as specified statements of financial transactions (SFTs) in various categories.
In their SFTs, banks and other reporting financial institutions record details of transactions involving cash deposits aggregating Rs 10 lakh or more in a year, credit card payments made in cash totalling over Rs 100,000 or by any other mode over Rs 10 lakh by a person in a financial year. Besides, the issuing companies have to report receipt of payments by a person investing in bond/debentures, shares, mutual funds, buyback of shares exceeding Rs 10 lakh in a financial year recorded in the SFTs.
The new Income Tax Return
forms introduced this year require taxpayers to furnish details of specified high-spend transactions, such as deposit of Rs 1 crore or more in a current account, expenditure of Rs 200,000 or more on foreign travel
or spending of Rs 100,000 or more on consumption of electricity, in case such persons are otherwise not required to income tax returns.
Currently PAN is compulsory for transactions like purchase of jewellery above Rs 200,000.
Proposed transactions to be included under the reporting statement of income tax include:
1. Payment to hotels above Rs 20,000.
2. Payment of rent above Rs 40,000.
3. Payment of educational fee/donations
above Rs 100,000 per annum.
4. Electricity consumption above Rs 100,000 per annum.
5. Domestic business class air travel/foreign travel
6. Deposit above Rs Rs 50 lakh in current account.
7. Purchase of jewellery, white goods, painting, marble, etc. above Rs 100,000