The SFT Reporting Rules assist the Income Tax Department in tracking specific high-value financial transactions. Here, SFT means Statement of Financial Transactions. Banks, financial institutions, companies, insurers, property registration offices, and other specified reporting entities are supposed to make reports about eligible transactions to the Income Tax Department.
In respect of the year 2026, the system is functioning based on the Income-tax Act 2025 and Income-tax Rules, 2026. Normally, reporting entities will have to register to obtain an Income-tax Department Reporting Entity Identification Number (ITDREIN) for reporting the information electronically.
In addition, it is important for taxpayers, as reported transactions will form part of the Annual Information Statement (AIS). Therefore, taxpayers must make sure that their financial transactions and ITR filing information are clear.
Forms for SFTs and their Due Dates
Under the 2026 regulations, there are distinct forms based on the nature of information that is to be submitted. Form 165 is the primary annual form for SFTs, and it applies to 12 categories of financial transactions. The deadline for submitting the form is usually by 31 May following the year of tax. Form 166 is for reporting reportable accounts as per the FATCA and CRS rules, and its due date is 31 May. Form 98 is used for specified transactions for people without PAN, and its due dates are 30 April and 31 October.
A new addition to the framework is Form 167 for reporting crypto asset service providers.
Some Significant SFT Reporting Thresholds for 2026
All financial transactions do not have to be reported under SFT. When the financial transaction crosses the defined threshold limit, then only will the financial transaction have to be reported. Some significant thresholds are deposits in savings-type accounts for ₹10 lakh or more, deposits or withdrawals in a current account of ₹50 lakh or more, and time deposits of ₹10 lakh or more during a financial year.
Transactions in credit card payments also become subject matter for reporting if they exceed ₹1 lakh or more in cash or ₹10 lakh or more by other modes. Transactions in shares, bonds or debentures of ₹10 lakh or more are also included in reporting. Transactions in immovable property of ₹45 lakh or more, or stamp duty value of ₹45 lakh or more, are reportable. Cash receipt of ₹2 lakh or more from sales of goods and services also comes under reportable if certain conditions are met.
What Would Be Done in the Event of Non-Filing of SFT?
If the SFT is not filed in time, then a notice can be served by the Income Tax Department. According to the provision which is available for the year 2026, ₹500 would be charged as a fine for each day of delay after the due date of filing the statement. If the reporting statement has not been filed even after receiving the notice, then a heavy fine of ₹1,000 can be charged per day.
The issue related to non-filing of incorrect and defective information is another point to be considered. In case there is some mistake made by the reporting entity, it is required to inform the department about it within 10 days. Otherwise, if the department finds out any kind of defect, then a fine of ₹50,000 could be charged.
Impact of SFT on ITR Filing
SFT filing is very closely linked to ITR filing since data provided by banks and other entities might appear in the AIS of the taxpayer. Hence, the taxpayer is likely to come across data related to the purchase of property, investments, deposits, credit card payments, and other high-value transactions when filing the income-tax return.
Taxpayers need to cross-check data available through AIS with the data available from bank statements, investments, property papers, and other sources of financial data before filing their income-tax returns. They can also take help from an online CA consultant “Estartup”.
Conclusion:
Proper accounting is the simplest method of avoiding any SFT-related complications. Reporters are expected to report all transactions that need reporting during the year and not wait till the submission date arrives. The PAN details, amounts involved, customer information, and account details should be properly verified before submission.
FAQs
1.What is meant by SFT reporting?
SFT reporting is the reporting of information in relation to the particular financial transactions that are required to be reported to the Income Tax Department.
2.What is the SFT form for the year 2026?
Form 165 will be the main annual SFT form in respect of the 12 financial transactions for the year 2026.
3.When should Form 165 be furnished?
Form 165 is to be furnished by 31 May of the year next after the relevant financial year.
4.Do the details in SFT have any effect on ITR?
Yes. Details of SFT can come up in AIS form; therefore, it becomes significant while preparing your income tax return.
5.What would be the consequences if the submission of SFT is delayed?
In case of any late submission of SFT, there will be an amount of ₹500 charged on a daily basis, and later on, ₹1,000 per day will be charged, as mentioned in the notice period in the concerned clause.
Moreover, if you want any other guidance relating to SFT Reporting Rules, please feel free to talk to our business advisors at 8881-069-069.
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