In this article we are going to look into form 61A in detail and discuss its applicability and uses in the taxation system.
There are certain kinds of financial transactions that are crucial to the economy purely on the merit of the nature of the transaction and not the value or the volume of the transaction.
Such transactions need to be recorded by the government for purposes other than taxation. It gives the government a general idea with regard to the income and expenditure patterns of the tax payer in these critical areas which can help it with many things such predicting the mood of the market or predicting the growth and help it formulate schemes to leverage this growth further.
And so the government requires all taxpayers to report these transactions irrespective of whether they attract taxes or not.
And for the purpose of uniformity of reporting and to increase the ease of assessing these transactions the government issues specific forms in specific formats for this kind of reporting. Form 61A is one such form.
It is a form that requires individuals to report any transactions that are listed under this form. Let’s go a little more in depth into Form 61A specifically.
Form 61A Of Income Tax
It is a form under which all taxpayers submit the Statement of Financial Transactions (SFT) for every financial year. The nature and the value of these Specified Financial Transactions have to be provided along with the Form 61A along with supporting documents if required.
This form can be filed electronically on the income tax portal with the use of a Digital Signature Certificate (DSC). Let us look at the list ‘special transactions’ that must be reported under Form 61A.
Types Of Transactions Under Form 61A
The transactions included under the Specified Financial Transactions are:
- Transactions made for purchasing, selling, exchange of goods.
- Contracts for work.
- Transactions regarding the delivery of various services.
- Transactions involving the investments and expenditures made.
- Deposits and loans.
The inclusion and exclusion limits for reporting of the transactions so made vary according to the nature or the transaction.
| Taxpayers submitting Form 61A | Transaction Type | Limits |
| Cooperative Banks and Companies | Purchase orders and Demand Drafts | The maximum limits are INR 10 lakhs. |
| Cooperative bank and the Banking Companies | Cash Payment | Used to buy the prepaid RBI offers. These include RBI bonds and others. |
| Cooperative bank and the Banking Companies | Deposits and Withdrawals | The minimum amount is INR 50 lakhs and you can increase it further. |
| Cooperative Banks, Banking Companies, Post Offices | Deposits | A total amount of 10 lakhs in all the accounts of the Taxpayer |
| Cooperative Banks, Banking Companies, The Post Master General of the Post Office | Cash Payment | A total of a minimum of 1 lakh in a year or more. In the case of credit card bills, the minimum amount is ten lakhs and can be extended further. |
| Company issuing bonds | Receipt | By getting the bonds, the amount is ten lakhs or more. |
| Share-issuing companies | Receipts | To acquire the shares, the receipt must exceed the amount of ten lakhs. |
| Listed Companies | Share buy-back | The shares are repurchased in the case when the amount exceeds ten lakhs. |
| Manager of Mutual Funds | Receipts | To acquire these shares, the receipts must exceed the amount of ten lakhs. |
| Foreign Exchange Dealer | Receipt | A receipt of ten lakhs or more has to be issued by the dealer of foreign sales and currency. This amount is incurred via cards or drafts. |
| Sub-Registrar/ Inspector General | Sale/Purchase | The amount of the transaction must be INR 30 lakhs or more. |
| The people responsible for the audit under Section 44B of ITA (Income Tax Act) | Cash receipt | For the sales of the goods, the amount must be more than two lakhs |
These are the various SFT (Specified Financial Transactions) under the Income Tax Rules, 1962 along with the limits.
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Form 61A Format
You must fill the following details in the Form 61A are as follows:
- Name
- PAN
- Folio Number
- Address
- Number of SFT
- The SFT and their total value in the financial year
- The financial year has to be mentioned in which all the transactions are being done.
- Details regarding the transactions made.
- Specified Financial Transactions
Due Date Of Form 61A
Form 61A has to be mandatorily submitted before 31st May of every financial year. Under any circumstances, if the taxpayer is unable to submit this form, a notice period of 30 days is offered to fulfill the formalities for the same.
Importance Of Form 61A
This form is of crucial value for the Income Tax Return Filing Department, helping them track all high-value transactions that are being made by the individuals, along with gaining an insight on how taxes on these transactions may be evaded.
It helps in developing transparency in the tax collection system. Not just this, it also allows the individuals to keep a record of all the high-value and specified transactions that they have carried out throughout the financial year.
Form 61A of Income Tax can be used in place of a PAN Card, on transactions, clause (a) to (h) Rule 114B. The transactions are –
- Purchasing and selling of immovable property, worth above 5 lakh rupees
- Purchasing and selling of vehicles excluding a two-wheeler
- Fixed deposits worth above 50 thousand rupees with a bank and a post office
- Specified securities, worth above 10 lakh rupees
- Bills for hotels and restaurants, above 25 thousand rupees
Penalties for Default in Submitting Form 61A
In case the individual fails to file and submit the form 61A, the authorities will send a warning to them with a tenure of 30 days. Under this period, it is expected of the individual to submit the form. After 30 days, a penalty of 500/day is charged for the same.
Penalties of Submitting the Wrong Information and Details
Knowingly or unknowingly, if the individual submits the wrong information and details, they can change it within ten days without having to pay any penalty.
In case the Income Tax authorities find any discrepancies, then the individual is informed, and a time of 30 days is provided for rectifying the same. If the person fails to do so, they have to pay penalties of up to INR 50,000. The date for rectification of mistakes can be extended in case of default information entered.
Conclusion:
The Form 61A of Income Tax is quite essential to deal with all the high-value transactions and finances to maintain transparency.
However, it may seem complicated and technical from a taxpayer’s point of view and keeping the penalties for defaulting and furnishing wrong information, it is always advisable to consult an expert for the purpose of filling this form.
If you have any other tax related queries or require guidance with your form 61A or any other regulatory form, contact us and we will ensure that you receive the right kind of assistance for your requirements.
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