Verification of SFT Reporting Entities by Income Tax Department

The Income-Tax Department of India is committed to promoting voluntary compliance among taxpayers. In its efforts to achieve this goal, the department relies on information provided by Reporting Entities such as Banks, Forex Dealers, Sub-Registrars, etc., regarding financial transactions. This information is then shared with taxpayers through their e-filing accounts in the form of the Annual Information Statement (AIS), which helps them accurately file their tax returns. However, despite the majority of Reporting Entities adhering to the statutory requirements and filing correct and complete Statements of Specified Financial Transactions (SFTs), some cases of non-compliance have been observed.

Addressing Reporting Entity Compliance Issues: Verification of a Prominent Bank

Recently, the Income-Tax Department conducted a verification exercise on a prominent bank based in Tamil Nadu to address issues related to Reporting Entity compliance. During this verification, several discrepancies were identified, highlighting instances where the bank had failed to file SFTs or had submitted incomplete or inaccurate information. Notable cases of non-reporting included cash deposits exceeding Rs 2,700 crore across more than 10,000 accounts, credit card payments totaling over Rs 110 crore, dividends distributed exceeding Rs 200 crore and shares issued worth more than Rs 600 crore.

Verification of SFT Reporting Entities by Income Tax Department

Furthermore, it was discovered that the SFTs filed by the bank were incomplete in various aspects. Major transactions, such as interest payments exceeding Rs 500 crore, time deposits and cash deposits and withdrawals in current accounts, were not reported as required. Additionally, the verification brought to light defective filings of Form 61B for the Automatic Exchange of Information (AEOI), particularly regarding account holders considered “resident” in other countries.

Previous Instances of Non-Reporting: Cooperative Banks in Uttarakhand

This verification exercise is not an isolated incident. The Income-Tax Department had previously conducted verifications on two cooperative banks in Uttarakhand. These verifications revealed unreported transactions worth several thousand crore, bringing attention to the importance of accurate reporting by banks and other Reporting Entities.

Outreach Programs for Reporting Entities: Ensuring Compliance

To ensure that Reporting Entities understand their legal obligations and processes and to address any difficulties they may face, the Income-Tax Department regularly organizes outreach programs throughout the country. These programs are designed to facilitate ease of compliance and promote accurate and complete reporting of financial transactions.

By proactively engaging with Reporting Entities, the department aims to create awareness about their responsibilities and provide clarity on compliance requirements. Through these initiatives, the Income-Tax Department seeks to foster a culture of voluntary compliance among taxpayers, leading to a more transparent and accountable financial ecosystem.


The Income-Tax Department of India is actively working towards promoting voluntary compliance among taxpayers. Through the verification of Reporting Entities, such as banks, the department aims to ensure the accurate and complete reporting of financial transactions. Instances of non-compliance, as highlighted by the recent verification of a prominent bank in Tamil Nadu, underscore the importance of adherence to statutory requirements. To address such issues and facilitate compliance, the department conducts outreach programs for Reporting Entities across the country. These efforts contribute to creating a more transparent and accountable tax ecosystem in India.


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