Understanding Form 61A: Transparency in Tax Filing

The Income Tax Act (ITA) mandates the filing of Form 61A to ensure transparency in financial transactions and identify potential tax evasion. This form serves as a statement of specified financial transactions (SFTs) for a specific financial year, submitted by designated entities to the government.

What is Form 61A?

Form 61A, previously known as the Annual Information Return (AIR), is a document mandated under Section 285BA of the ITA. It reports details of various high-value financial transactions carried out during a financial year. As per Rule 114E of the Income Tax Rules, 1962, it captures specific transaction types and their values.

Who Needs to File Form 61A?

The responsibility of filing Form 61A falls upon various entities, including:

• Banks (co-operative banks included) and post offices
• Non-banking financial companies (NBFCs)
• Nidhi companies (as defined under Section 406 of the Companies Act, 2013)
• Credit card issuers
• Bond or debenture issuing companies/institutions
• Stock exchange-listed companies
• Mutual fund trustees
• Offshore banking units, money changers, authorized dealers (as defined under FEMA, 1999)
• Sub-registrars or Inspector Generals appointed under the Registration Act, 1908
• Individuals liable for audit under Section 44AB of the ITA

What Transactions are Reported in Form 61A?

The specific transactions to be reported in Form 61A are governed by Annexure A of Rule 114E. Here's a glimpse into some of the reportable transactions and their corresponding thresholds:

• Deposits or withdrawals exceeding INR 10 lakhs (in a single or multiple accounts) at banks, co-operative banks, and post offices.
• Cash payments for demand drafts, purchase orders, or prepaid RBI investment instruments exceeding INR 10 lakhs annually.
• Share applications or receipts from individuals for acquiring shares exceeding INR 10 lakhs in a year (by companies issuing shares).
• Receipts from individuals exceeding INR 10 lakhs in a year (by companies or institutions issuing bonds or debentures).
• Share buy-backs exceeding INR 10 lakhs (by listed companies).
• Total credit card bill payments (online or cash) exceeding INR 10 lakhs and INR 1 lakh, respectively, in a year.
• Receipts from sale of foreign currency or expenses incurred exceeding INR 10 lakhs (via credit/debit cards, traveller’s cheques, drafts, or other financial instruments) by foreign exchange dealers.
• Receipts from individuals exceeding INR 10 lakhs for acquiring mutual fund units (by mutual fund managers or trustees).
• Sale or purchase of immovable property exceeding INR 30 lakhs (reported by Inspector Generals or Sub-registrars appointed under the Registration Act of 1908).
• Cash receipts exceeding INR 2 lakhs for the sale of goods or rendering services (by individuals liable for audit under Section 44AB of the ITA).

Importance of Form 61A

Form 61A plays a vital role in the following ways:

• Transparency: It facilitates effective tracking of high-value transactions by the Income Tax Department, aiding in identifying potential tax avoidance practices.
• Record Keeping: It helps taxpayers maintain a record of all significant financial transactions undertaken in a particular financial year.
• PAN Substitute: Under Rule 114B, Clause (a) to (h), taxpayers can use Form 61A instead of their PAN card to carry out specific transactions.

Due Date for Filing and Penalties for Delay

The deadline for filing Form 61A is May 31st of each year for the preceding financial year. A 30-day notice is issued to non-compliant taxpayers, requiring them to submit the form within the stipulated period. Failure to comply further attracts a penalty of INR 500 per day of delay.

For inaccurate information provided in Form 61A, reporting entities or individuals have a 10-day window to rectify the errors without penalty. The Income Tax Department can also levy penalties ranging from INR 500-50,000 for incorrect or insufficient information.